26th

Fiscal Period Business Report(Statement of Financial Performance)

June 1, 2018 – November 30, 2018

Stock
Code

8976

6-2-1 Ginza, Chuo Ward, Tokyo http://www.daiwa-office.co.jp/en/

I. Overview of Daiwa Office Investment Corporation
To Our Investors
We would like to express our deep gratitude to all our unitholders for your support of Daiwa Office Investment Corporation (DOI).
In the 26th Fiscal Period, DOI posted operating revenues of 13,193 million yen and operating income of 6,535 million yen. Our
distribution per unit for the 26th Fiscal Period is 11,997 yen, an increase of 847 yen from the 25th Fiscal Period.
See page 4 for financial and management highlights
Average contract rent at the end of the 26th Fiscal Period was 19,237 yen. Rent revisions contributed to a 19 million yen increasein monthly contracted rents from the end of the previous fiscal period, which was a 9.9% rate of increase for average monthlyrent. Furthermore, the rate of increase for average monthly rent stood at 16.0% due to replacement of tenants, and the occupancy
rate was 98.9%.We will realize sustainable internal growth through the thorough implementation of the hands-on approach that
continuously applies “Bonji-Tettei” as the code of conduct.

See page 8 for details of internal growth

During the 26th Fiscal Period, DOI acquired three properties (total acquisition price: 20,295 million yen), Kita-Shinagawa Gotenyama
Building, Sasazuka NA Building and Prime Kanda Building.
During the 27th Fiscal Period, DOI acquired Sasazuka South Building (acquisition price: 3,000 million yen).
DOI will continue to selectively acquire office properties centering on the five central wards of Tokyo
in an effort to further improve the value of its portfolio.
See page 12 for details of external growthIn financial matters, DOI promoted diversification of repayment dates by taking out long-termborrowings. DOI will continue striving to further strengthen its financial structure while working to
reduce future refinancing risks. See page 14 for details of financial conditions
DOI will continue to increase the competitiveness of its properties and aim to achieve
its medium- to long-term goal of continuous growth through leveraging borrowing
capacity backed by robust financial base, while increasing long-term EPS (net income
after deducting gain on sales of properties). We wish for the continued success of
our unitholders and ask for your continued support of DOI.

Motoi Takahashi Executive Director of Daiwa Office Investment Corporation
Table of Contents

I. Overview of Daiwa Office Investment Corporation
To Our Investors……………………………………………… 2

II. Asset Management Report…………………………… 17
III. Balance Sheets… ……………………………………… 22

Characteristics and Strategies of
Daiwa Office Investment Corporation ………………………… 3
Financial and Management Highlights………………………… 4
Overview of Portfolio (Portfolio list)…………………………… 5
Overview of Portfolio (Portfolio distribution)…………………… 6
Internal Growth Measures… ………………………………… 8External Growth Measures…………………………………… 12
Financial Conditions… ……………………………………… 14
ESG Measures… …………………………………………… 15
Description of Asset Manager………………………………… 16

2

IV. Statements of Income and Retained Earnings…… 24
V. Statements of Changes in Net Assets……………… 25
VI. Statements of Cash Flows… ………………………… 26
VII. Notes to Financial Statements……………………… 27
VIII. Independent Auditor’s Report… …………………… 41
IX. Investor Information… ………………………………… 42

Characteristics and Strategies of Daiwa Office Investment Corporation

Characteristics of Daiwa Office Investment Corporation

Office Specialized
REIT

REIT Focused on the Five
Central Wards of Tokyo

Effective application of operational knowhow specialized in officebuildings

Places priority on owning office buildings in favorable locations forwhich there is high demand

Office buildings 100.0%

Major Regional Cities 2.0%
Greater Tokyo

17.2%

Five Central
Wards of Tokyo

80.8%

Based on acquisition price(Note) Please note that the percentages in the above graphs are as of December 27, 2018

Growth Strategies
Activities for solid growth・Continue acquiringproperties

Achievement of a 500 billion yen asset size

・Leverage borrowing
capacity

Keep the medium- to long-term, upper-limit
LTV target range within 40%~50%

500.0(billion yen)
500

458.3 467.7 469.3 469.3

439.4

459.7 462.7

400

300

Establishment of stable revenue base・Property management
activities

Continuation of “Bonji-Tettei”
Thorough implementation of hands-on
approach
Further strengthen relations with tenants

・Maintain andimprove property
value

Capture tenant needs by reinforcing ties withproperty managers
Strategic renewals and lease-up activities

・Financial activities

Reduce refinancing risk by extending
borrowing periods and diversifying
repayment dates

Distribution per Unit
(Note 1) The forecasts on distribution are calculated
based on certain assumptions and may vary due
to changes in the status and other factors.
Moreover, the forecasts set forth herein should
not be construed as a guarantee of distribution
amounts.
(Note 2) Distribution per unit for the 27th Fiscal Period is
calculated by dividing the amount obtained bydeducting provision of reserve for reduction
entry (143 million yen) from unappropriatedretained earnings by the total number ofinvestment units issued and outstanding.

200

100

0
Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period
As ofMedium-term
ended
ended
ended
ended
ended
ended
Januarygoal
May 2016 November 2016 May 2017 November 2017 May 2018 November 2018 22, 2019

Fiscal period ended November 2018
(26th Fiscal Period)

Fiscal period ending May 2019

(Note 2)(27th Fiscal Period)

Fiscal period ending November 2019(28th Fiscal Period)

11,997 yen
12,300 yen
12,400 yen(Actual)(Forecast)(Forecast)

I. Overview of Daiwa Office Investment Corporation

3

Financial and Management Highlights
Steady increase of distributions due to progress in internal growth■ Operating Revenues■ Operating Income■ Net Income(Million yen)
14,000(Million yen)
7,000(Million yen)
6,000

12,853
11,00012,547

12,735

13,4406,678

13,193
6,143

6,133

6,177

5,901

5,887

6,535

5,324

5,000

4,000

3,000

2,000

5,359

5,455

8,000

5,000

0

0
22nd Period 23rd Period 24th Period 25th Period 26th Period■ Distribution per Unit
(Yen)
12,00010,000

Forecast from one year earlier
Actual dividends

8,328
8,700
9,142

7,570
7,820
8,256

9,000
9,350
9,688

0
22nd Period 23rd Period 24th Period 25th Period 26th Period

22nd Period 23rd Period 24th Period 25th Period 26th Period

Forecast from six months earlier

9,750
9,850
10,5089,900
10,55010,695

10,56010,70010,764

10,71010,77010,957

10,80011,000
11,15021st Period

22nd Period

23rd Period

24th Period

25th Period

12,40011,40011,85011,997

12,00012,30026th Period

27th Period 28th Period(Forecast) (Forecast)

8,000

6,000

4,000

2,000

0
18th Period

19th Period

20th Period

26th Period

25th Period

24th Period

23rd Period

22nd Period(November 2018)(May 2018)(November 2017)(May 2017)(November 2016)

Operating revenues (Million yen)

13,193

13,44012,735

12,547

12,853Operating income (Million yen)

6,535

6,678

6,177

6,133

6,143

Ordinary income (Million yen)

5,902

5,888

5,456

5,360

5,325

Net income (Million yen)

5,901

5,887

5,455

5,359

5,324

Total number of units issued (Units)491,877

491,877

497,869

497,869

497,869

Net assets per unit (Yen)

516,641

515,730

515,790

515,317515,230

Distribution per unit (Yen) (Note)

11,997

11,15010,957

10,764

10,695

Total assets (Million yen)479,212467,040

483,173483,730

483,450

41.5

40.5

42.3

42.2

42.3

58

55

54

54

53

459.7

439.4

469.3

469.3

467.7

360,958.95

340,144.07

338,377.31

338,436.22

336,722.04

98.9

99.0

98.2

97.7

97.7

Loan-to-value (LTV) (Based on total asset value) (%)
Number of investment properties
Asset size (Billion yen)
Total rentable area (m )2

Occupancy rate (%)(Note) Distribution per unit for the 25th fiscal period is calculated by dividing the amount obtained by subtracting provision for reserve for reduction entry (403 million yen) from unappropriated retained earnings by the
total number of investment units issued.

4Overview of Portfolio (Portfolio list)(As of December 27, 2018)
Property Name

Address

Appraisal
Execution Acquisition
Rentable Structure andPrice
Value at End
Area (m2) No. of Floors Completion of Major
of Period
Share(Note 2)
(Note 3)
Repairs mm yen (%) (mm yen) (Note 4)

Ownership TypeLand

Building

PML (%)

Five Central Wards of Tokyo (Note 1)
simple andGinza, Chuo-ku, Tokyo
8,114.93 SRC B3/12F July 1963 2003 14,100 3.0
17,400 Feeleasehold
Fee simple
4.53
Ginza, Chuo-ku, Tokyo
2,032.11 SRC B3/8F Aug. 1972 2003
3,050 0.7
3,860 Fee simple
Fee simple
3.97
Shibaura, Minato-ku, Tokyo
9,619.67 SRC B1/12F Oct. 1987
8,265 1.8
7,880 Fee simple
Fee simple
3.82
Minami Aoyama, Minato-ku, Tokyo
2,715.54 S SRC B2/5F Sept. 1990
4,550 1.0
4,640 Fee simple
Fee simple
9.19
Kanda Sarugakucho, Chiyoda-ku, Tokyo
3,657.43
SRC 8F
June 1985
3,190 0.73,850 Fee simple
Fee simple
7.14
Hamamatsucho, Minato-ku, Tokyo
3,663.38 SRC B2/10F July 1993
2,865 0.63,700 Fee simple Compartmentalized
3.79
ownership
Jingumae, Shibuya-ku, Tokyo
2,198.61 RC B1/4F
Dec. 1997
2,800 0.6
2,620 Fee simple
Fee simple
13.33
Shibadaimon, Minato-ku, Tokyo
2,386.48 SRC RC B1/7F Nov. 1996
2,578 0.6
3,250 Fee simple
Fee simple
3.72
Kanda Misakicho, Chiyoda-ku, Tokyo
2,137.53
S 8F
July 1996
2,346 0.52,870 Fee simple
Fee simple
4.24
Shinbashi, Minato-ku, Tokyo
2,595.76 SRC B1/8F
Apr. 1974 2006
2,080 0.4
2,530 Fee simple
Fee simple
5.51
Tsukiji, Chuo-ku, Tokyo
2,659.59
SRC 10F
Jan. 1996
1,560 0.32,000 Fee simple
Fee simple
4.23
Tsukiji, Chuo-ku, Tokyo
1,487.44 SRC B1/7F Jan. 1990
1,240 0.3
1,610 Fee simple
Fee simple
4.98
Tsukishima, Chuo-ku, Tokyo
8,425.69
S 5F
July 1996
7,840 1.7
10,500 Fee simple
Fee simple
4.87
Nihombashi-Horidomecho, Chuo-ku, Tokyo
2,850.81 SRC B2/7F
Apr. 1993
2,520 0.52,750 Fee simple
Fee simple
4.68
Azabudai, Minato-ku, Tokyo
1,697.88 SRC B2/9F
Apr. 1984
1,600 0.3
1,940 Fee simple
Fee simple
6.64
Hatchobori, Chuo-ku, Tokyo
3,265.83 SRC B1/8F Oct. 1974 2005
3,460 0.73,450 Fee simple Compartmentalized
4.51
ownership (100%)
6.19
Kojimachi, Chiyoda-ku, Tokyo
2,695.31 SRC B2/9F Oct. 1987
2,910 0.6
2,880 Fee simple Compartmentalized
ownership (100%)
Shinbashi, Minato-ku, Tokyo
11,614.92
SRC 9F
Apr. 1973 2003 13,860 3.0
13,700 Fee simple Compartmentalized
3.89
ownership (100%)
Yoyogi, Shibuya-ku, Tokyo
22,754.54 S SRC B3/34F Sept. 1995
66,900 14.5
63,000 Co-ownership Co-ownership2.03
Udagawacho, Shibuya-ku, Tokyo
2,480.65 RC B1/9F
Aug. 2006
5,900 1.3
5,210 Fee simple
Fee simple
1.56
simple andNihombashi-Odenmacho, Chuo-ku, Tokyo
2,379.31
SRC 8F
Mar. 1985
2,460 0.5
2,230 Feeleasehold
Fee simple
4.19
Kanda-Jimbocho, Chiyoda-ku, Tokyo
3,164.26
S B1/8F
Mar. 1997
4,150 0.9
3,680 Fee simple
Fee simple
5.05
Nishi-Shimbashi, Minato-ku, Tokyo
4,815.84 SRC B1/10F July 1993
5,000 1.1
6,860 Fee simple
Fee simple
3.76
Nihombashi-Kayabacho, Chuo-ku, Tokyo
5,899.11 S SRC B1/8F Apr. 2010
5,600 1.2
8,190 Fee simple
Fee simple
4.50
Kanda-Jimbocho, Chiyoda-ku, Tokyo
2,889.34
S 9F
Feb. 2010
3,550 0.8
5,220 Fee simple
Fee simple
5.33
Maruyamacho, Shibuya-ku, Tokyo
13,960.87 S SRC B1/15F Oct. 2002
24,000 5.2
34,700 Fee simple
Fee simple
3.11
Nihombashi Hongokucho, Chuo-ku, Tokyo
2,143.08
S 8F
May 2010
1,721 0.4
2,580 Fee simple
Fee simple
3.80
Compartmentalized
Shinjuku, Shinjuku-ku, Tokyo
6,751.31 S RC B2/11F Jan. 2012
9,650 2.1
15,900 Right of site ownership (100%)
4.44
Akasaka, Minato-ku, Tokyo
8,747.39 SRC B2/7F Sept. 1990
9,200 2.0
15,000 Fee simple
Fee simple
7.14
Shibuya, Shibuya-ku, Tokyo
6,328.94 S B1/12F
Dec. 1988
7,000 1.5
10,300 Fee simple
Fee simple
5.64
Minami Azabu, Minato-ku, Tokyo
13,234.39 S RC B1/6F Sept. 2009
14,000 3.0
17,200 Fee simple
Fee simple
2.67
Ebisu, Shibuya-ku, Tokyo
2,951.70 SRC B1/9F Dec. 1997
4,135 0.9
6,090 Fee simple
Fee simple
2.44
Okubo, Shinjuku-ku, Tokyo
7,498.33
S10F
Aug. 2010
8,450 1.8
10,900 Fee simple
Fee simple
4.46
Jingumae, Shibuya-ku, Tokyo
4,426.10 S RC B1/7F Nov. 2001
9,800 2.1
12,400 Fee simple
Fee simple
4.42
Shinsen-cho, Shibuya-ku, Tokyo
2,811.35 RC B1/9F
Sept. 2001
4,800 1.0
6,720 Fee simple
Fee simple
6.21
Nanpeidaicho, Shibuya-ku, Tokyo
8,566.73 S SRC B1/11F Feb. 2004
16,000 3.5
18,400 Fee simple
Fee simple
1.61
Nihonbashi Hakozakicho, Chuo-ku, Tokyo
32,055.85 S SRC RC B2/20F Feb. 1994
28,000 6.1
31,700 Fee simple
Fee simple
1.76
Hatchobori, Chuo-ku, Tokyo
2,622.42 S SRC B1/10F Feb. 2006
2,871 0.6
3,360 Fee simple
Fee simple
5.89
Hatchobori, Chuo-ku, Tokyo
1,723.15 SRC B1/9F Feb. 1996
1,647 0.4
1,850 Fee simple
Fee simple
7.03
Nishishinjuku, Shinjuku-ku, Tokyo
6,967.61 SRC RC S B2/11F Aug. 1991
13,710 3.0
15,900 Fee simple
Fee simple
4.32
Nihonbashi Koami-cho, Chuo-ku, Tokyo
5,630.17 S SRC 7F
Feb. 1999
8,180 1.8
8,290 Fee simple
Fee simple
5.76
Higashi Nihonbashi, Chuo-ku, Tokyo
5,015.88
S 7F
Mar. 2008
6,370 1.4
6,860 Fee simple
Fee simple
4.37
Daikanyamacho, Shibuya-ku, Tokyo
1,588.35
S 6F
Mar. 2001
2,280 0.5
3,370 Fee simple
Fee simple
6.21
Nishishinjuku, Shinjuku-ku, Tokyo
1,120.58
RC 4F
Mar. 1989
942 0.2
1,210 Fee simple
Fee simple
8.28
Kanda Mikura-cho, Chiyoda-ku, Tokyo
1,719.51 SRC S B1/7F Jan. 1991
1,592 0.3
1,740 Fee simple
Fee simple
6.01
Kanda Higashi Matsushitacho, Chiyoda-ku, Tokyo 3,980.56
S 9F
Feb. 2005
4,200 0.9
5,340 Fee simple
Fee simple
3.86
Kanda Suda-cho, Chiyoda-ku, Tokyo
2,211.64 S RC B1/10F Aug. 1990
2,295 0.5
2,710 Right of site Compartmentalized
5.12
ownership (100%)Fee simple
Sasazuka, Shibuya-ku, Tokyo
16,160.25 SRC RC S B2/18F Feb. 1993
15,500 3.3
16,100 Fee simple
1.52
Sasazuka, Shibuya-ku, Tokyo
3,758.00 SRC S B1/8F Dec. 1991
3,000 0.6
3,300 Fee simple Compartmentalized
5.90
ownership (100%)
Subtotal
280,176.12
373,717 80.8
437,740
Greater Tokyo Area (Note 1)
Higashi-Ikebukuro, Toshima-ku, Tokyo
4,461.47 SRC S B1/9F June 1993
2,958 0.6
4,070 Fee simple
Fee simple
3.55
50 Daiwa Higashi-Ikebukuro
Kita-Shinagawa, Shinagawa-ku, Tokyo
6,548.17 SRC B1/11F July 1991
7,710 1.7
6,180 Fee simple
Fee simple
7.19
51 Daiwa Shinagawa North
Osaki, Shinagawa-ku, Tokyo
1,786.06 S RC B1/6F Sept. 2007
1,650 0.4
2,350 Fee simple
Fee simple
6.14
52 Daiwa Osaki 3-chome
Kamiooka Nishi, Konan-ku, Yokohama City, Kanagawa 2,630.30 S SRC B3/7F May 2011
2,000 0.4
2,830 Fee simple
Fee simple
6.29
53 Daiwa Kamiooka
Kamiogi, Suginami-ku, Tokyo
17,778.14 S SRC B2/18F June 1993
15,220 3.3
21,500 Fee simple
Fee simple
1.18
54 Integral Tower
Meguro, Meguro-ku, Tokyo
3,519.50 S SRC B2/14F July 2009
5,600 1.2
6,820 Fee simple
Fee simple
1.68
55 Daiwa Meguro Square
Ogikubo, Suginami-ku, Tokyo
3,849.63 SRC B1/7F Nov. 1990
3,800 0.8
4,610 Fee simple Compartmentalized
6.41
56 Daiwa Ogikubo
ownership (100%)
38,100 8.2
39,900 Quasi co-ownership Quasi co-ownership
0.92
57 CONCURRED Yokohama (Note 6) Kinko-cho, Kanagawa-ku, Yokohama City, Kanagawa 28,052.98 S SRC B1/20F Feb. 2008
2,396.96 SRC S 8F
July 1992
2,500 0.5
2,630 Fee simple
7.07
Fee simple
58 Kita-Shinagawa Gotenyama Building Kita-Shinagawa, Shinagawa-ku, Tokyo
Subtotal
71,023.21
79,538 17.2
90,890Major Regional Cities (Note 1)
Awaji-cho, Chuo-ku, Osaka City, Osaka
13,517.62 S SRC B1/16F Feb. 2008
9,481 2.0
11,700 Fee simple
Fee simple
3.48
59 Daiwa Kitahama
Subtotal
13,517.62
9,481 2.0
11,700
Total
364,716.95
462,736 100
540,330(Note 1) The Five Central Wards of Tokyo are Chiyoda, Chuo, Minato, Shinjuku and Shibuya Wards (or ku). The Greater Tokyo Area is Tokyo (excluding the Five Central Wards), and Kanagawa, Chiba and Saitama prefectures.
Major Regional Cities are the Osaka area (Osaka, Kyoto and Hyogo prefectures), Nagoya area (Aichi, Mie and Gifu prefectures) and ordinance designated cities and core cities set forth in the Local Autonomy Act.
(Note 2) The Rentable Area is indicated as of November 30, 2018 (end of 26th Fiscal Period).
(Note 3) Structure acronyms are S for steel, RC for reinforced concrete and SRC for steel-reinforced concrete.
(Note 4) The values entered in the Appraisal Value at End of Period column are the appraisal values in the real estate appraisal reports with a pricing point of December 1, 2018 for Sasazuka South Building, and of November
30, 2018 (end of 26th Fiscal Period) for other properties.
(Note 5) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding Shinjuku Maynds Tower is a co-ownership interest equal to 3/7 of the entire property. The figure shown for the Rentable
Area is the figure equivalent to 3/7 of the total rentable area of the entire building.
(Note 6) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding CONCURRED Yokohama is a quasi co-ownership interest equal to 75/100 of the entire property. The figure shown for
the Rentable Area is the figure equivalent to 75/100 of the total rentable area of the entire building.

1 Daiwa Ginza
2 Daiwa Ginza Annex
3 Daiwa Shibaura
4 Daiwa Minami-Aoyama
5 Daiwa Sarugakucho
6 Daiwa A Hamamatsucho
7 Daiwa Jingumae
8 Daiwa Shibadaimon
9 Daiwa Misakicho
10 Daiwa Shimbashi 510
11 Daiwa Tsukijiekimae
12 Daiwa Tsukiji
13 Daiwa Tsukishima
14 Daiwa Nihonbashi Horidomecho
15 Daiwa Azabudai
16 Daiwa Kyobashi
17 Daiwa Kojimachi 4-chome
18 Daiwa Onarimon
19 Shinjuku Maynds Tower (Note 5)
20 Daiwa SHIBUYA EDGE
21 Daiwa Kodenmacho
22 Daiwa Jimbocho
23 Daiwa Nishi-Shimbashi
24 Daiwa Kayabacho Building
25 Daiwa Jinbocho 3-chome
26 E SPACE TOWER
27 Daiwa Nihonbashi Hongokucho
28 shinyon curumu
29 Daiwa Akasaka
30 Daiwa Shibuya Miyamasuzaka
31 Daiwa Azabu Terrace
32 Daiwa Ebisu 4-chome
33 LAQUAS Higashi Shinjuku
34 Daiwa Aoyama
35 Shinsen Place
36 Glass City Shibuya
37 Daiwa River Gate
38 Daiwa Hatchobori ekimae
39 Daiwa Hatchobori ekimae West
40 Daiwa Nishi-Shinjuku
41 Kirin Nihonbashi Building
42 Daiwa Higashi-nihonbashi
43 Square Daikanyama Building
44 Shinjuku West Building
45 Daiwa Kanda Mikuracho Building
46 Daiwa Kanda East
47 Prime Kanda Building
48 Sasazuka NA Building
49 Sasazuka South Building

I. Overview of Daiwa Office Investment Corporation

5Overview of Portfolio (Portfolio distribution)
DOI concentrates its investment in the Five Central Wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku and Shibuya)
Shibuya-ku

7 Daiwa Jingumae

19 Shinjuku Maynds Tower

20 Daiwa SHIBUYA EDGE

26 E SPACE TOWER

30 Daiwa Shibuya Miyamasuzaka

32 Daiwa Ebisu 4-chome

48 Daiwa Higashi-Ikebukuro

Ikebukuro Sta.
50

34 Daiwa Aoyama

35 Shinsen Place

36 Glass City Shibuya

54

43 Square Daikanyama Building

Suginami-ku

48 Sasazuka NA Building

Toshimaku

49 Sasazuka South Building

Nakano Sta.

56 Ogikubo Sta.
54 Integral Tower

33
HigashiShinjuku Sta.

Shinjuku-ku

Shinjuku-ku
44
40
Honancho Sta.

56 Daiwa Ogikubo

Tokyo Metro
Ginza Line
Marunouchi Line
Hibiya Line
Tozai Line
Chiyoda Line
Yurakucho Line
Hanzomon Line
Namboku Line
Fukutoshin Line

Toei Subway

28 shinyon curumu

33 LAQUAS Higashi Shinjuku

40 Daiwa Nishi-Shinjuku

44 Shinjuku West Building

e 19
Lin
ew
oN
i
e
K
and
Line
Keio

34

20
26
3 Daiwa Shibaura

4 Daiwa Minami-Aoyama

35

6 Daiwa A Hamamatsucho

36

ine
hi L
Tos
n
e
Den
yu
Tok

Lin
e
To
kyu
To
yok
o
8 Daiwa Shibadaimon

10 Daiwa Shimbashi 510

30
Shibuya Sta.
43

Naka-meguro Sta.

32
Ebisu Sta.

15 Daiwa Azabudai

55

Main investment area:
Five Central Wards ofTokyo
Focused investmentarea: Greater Tokyo

6

Gaienmae Sta.

4

Omotesando Sta.

JR

Major Regional Cities

Aoyamaitchome Sta.

7

Oedo Line
Asakusa Line
Mita Line
Shinjuku Line
Yamanote Line
Saikyo Line
Chuo Line
Sobu Line
Keiyo Line
Yokosuka Lineand
Sobu Rapid Line

Yotsuya Sta.

Shibuya-ku

49 48

Minato-ku

Shinjuku Sta.
28

18 Daiwa Onarimon

23 Daiwa Nishi-Shimbashi

29 Daiwa Akasaka

31 Daiwa Azabu Terrace

55 Daiwa Meguro Square

Meguro Sta.

Osaki Sta.
52

(As of December 27, 2018)

Chuo-ku

1 Daiwa Ginza

2 Daiwa Ginza Annex

11 Daiwa Tsukijiekimae

12 Daiwa Tsukiji

24 Daiwa Kayabacho Building

27 Daiwa Nihonbashi Hongokucho 37 Daiwa River Gate

13 Daiwa Tsukishima

14 Daiwa Nihonbashi Horidomecho

38 Daiwa Hatchobori ekimae

39 Daiwa Hatchobori ekimae West 41 Kirin Nihonbashi Building 42 Daiwa Higashi-nihonbashi

16 Daiwa Kyobashi

21 Daiwa Kodenmacho

Chiyoda-ku

Asakusa Sta.
Oshiage Sta.

Suidobashi Sta.

9

Akihabara Sta.

5

25 22

Kudanshita Sta.

47
46
45

27

42
21

Chiyoda-ku

12Toranomon Sta.

29

Shimbashi Sta.
23
10
18

6

15
Shibakoen Sta.

17 Daiwa Kojimachi 4-chome

22 Daiwa Jimbocho

25 Daiwa Jinbocho 3-chome

45 Daiwa Kanda Mikuracho Building

46 Daiwa Kanda East

47 Prime Kanda Building

Nihombashi Sta.

Hibiya Sta.

Akasaka Sta.

9 Daiwa Misakicho

Ningyocho Sta.

Tokyo Sta.
Akasakamitsuke Sta.

5 Daiwa Sarugakucho

14

Otemachi Sta.

17

Kinshicho Sta.

24 Suitengumae37

Chuo-ku

41

16

39 38

Ginza Sta.

12

Sta.

Hatchobori
Sta.

11
Tsukishima Sta.

13

8Minato-ku
31

3

51 Daiwa Shinagawa North

53 Daiwa Kamiooka

52 Daiwa Osaki 3-chome

58 Kita-Shinagawa Gotenyama Building

57 CONCURRED Yokohama

59 Daiwa Kitahama

Shinagawa
Sta.

51
58

Shinagawaku

59

53 57

I. Overview of Daiwa Office Investment Corporation

7

Internal Growth Measures
Realizing rent increases upon contract renewal and tenant replacement while working to heighten tenant satisfaction

Office Market Trends
Further improvements in vacancy rate are observed and rent levels are continuously increasing.

■ Office Building Rental Market of Tokyo■ Office Market Medium-term Forecast
(%)
10.0

(Yen/tsubo)
24,000
Average rents of existing buildings (left axis)
Vacancy rate of existing buildings (right axis)

22,000(Tsubo)500,000

8.0

20,60420,000

6.0

18,0004.0

16,0002.0

New supplies (others)
Vacancy rate

(%)
10.0

New supplies (overall)

400,000

8.0

300,000

6.0

200,000

4.0

100,000

2.0
0.0

0

1.85
14,000New supplies (Grade-A, etc.)
Floor area of new demands

Predicted figures*-100,000

0.02001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

(Source) Miki Shoji(Source) CBRE “Mid-term Office Market Outlook 2018~2022”*Predicted figures as of July 2018

■ Occupancy Rate

■ Rate of New Leases and Cancellations*

(%)
100.0

95.9
95.0

96.4

95.4

-2.0

95.0

96.3 96.4

97.2 97.3

98.3 98.7

97.7 97.7

98.2

(%)
20.0

99.0 98.9
97.6 97.8

13.4

98.0 97.6

9.8

10.0
3.2

94.3

8.2

3.3

5.7

4.4

6.1 6.2
2.0

4.3

2.9 3.8 4.4 4.0 2.7 2.6 2.1

1.8

0.0
92.4

-3.4
-3.9

90.0

Occupancy rate (actual)
Occupancy rate (forecast)Occupancy rate (forecast)((as of disclosure in July 2018)

85.0

-10.0

-5.9

-7.3 -6.3-5.3-2.4 -1.7 -1.6

-2.8
-6.1 -5.7

Rate of new leases
Rate of cancellations-20.0

End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period-3.8 -3.6 -3.9 -3.3 -2.7 -3.9

-1.9

Expected rate of new leases
Expected rate of cancellations

End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period* Transition of rate of new leases and cancellation areas to the total rentable area.

Rental Business Status■ Average Contract Rent and Market Rent

■ Attribution Analysis/Monthly Contract Rent*(Million yen)

(Yen/tsubo)
30,000100

27,000

90

84.79
82.30
83.52

24,000

2,200
2,150
2,100

80

21,00070

2,000

18,00019,295
19,574 19,237 60

1,950
1,900

15,000

Average contract rent (left axis)*
Unit rent index(Period-on-period comparison, right axis)**12,00050

40
End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period* Average contract rent is average monthly contracted rent with tenants at the end of each fiscal period.
** Unit rent index is the earning rate of unit rent of individual properties indexed with the 7th Fiscal Period
as100.

8

Decreasedue torent revisions

2,050

+19

1,958

Increasedue torent revisions+69

Decrease due totenants’cancellations

–62

2,067

+83

-0
Increase due to
new leases

Increase due to
new acquisition

1,850
1,800
End of 25th FP
monthly contract rent

End of 26th FP
monthly contract rent

* Monthly contract rent is the total of final rent from tenants contracting at the end of the Fiscal Period.
Monthly contract rent for Shinjuku Maynds Tower and CONCURRED Yokohama were respectively adjusted to
3/7 and 75/100 of the total.

Status of Contract Renewal/New Lease■ Area of which Contract Ended/Will End In and Afterthe Fiscal Period Ended November 2018 (26th fiscal period)(Based on rentable area)
(%)
30.0

25.0

22.8

21.9

20.0

19.7

49.9

2.9

40.4

7.8

23rd Period

48.8

44.4

6.6

42.6

0.2

29th Period

30th Period

0.7

37.5

61.1

1.4

26.5

70.8

2.7

8.6

66.7

19.9

22.0(Note 1)

8.5
0.0

28th Period

3.9

50.1

19th Period

0.0

27th Period

53.4

49.0

20th Period

17th Period
26th Period

4.2

51.7

18th Period 4.8

5.0

49.9

43.8

21st Period

10.0

3.2(Note 2)

24th Period

22nd Period

15.1

15.0

45.8

26th Period
25th Period

Scheduled

20.0■ Changes in Ratios of Areas with Rent Increase/Decrease/
Unchanged and Cancellation upon Contract Renewal

57.4

20.0
Decrease

40.0

60.0
Unchanged

Increase

12.1
80.0
Cancellation

100.0
（%）

(Note) The ratio of areas of which lease contracts are scheduled to be renewed in each fiscal period to thetotal rentable area (357,153.44m2) as of the end of November 2018 is indicated.

(Note 1) Of the increase in the 17th FP, 14.1% is due to some tenants switching from sublease agreements tomaster lease agreements and 7.9% is due to negotiations with tenants.
(Note 2) Decrease in the 25h FP is due to some tenants switching from sublease agreements to master leaseagreements.

■ Changes in Rent Increase/Decrease Rate of Contract
Renewal Tenants (Sections)■ Total Monthly Rent and Increase/Decrease Rate at Tenant
Replacement(Thousand yen)
100,000

(%)
15.0
10.0
5.0

4.5

0.0

0.0

2.5

-5.2 -6.5-5.0-7.0 -10.2

-10.0

5.0
1.0

-7.0

9.0

9.8
4.3

5.2
5.2
0.0

-4.9

9.0

0.0

7.3
6.1
7.2 6.1

-5.1

0.0

8.1
8.1

9.9

7.8

6.6 9.9

7.8

4.2
0.0

0.0

80,00060,0000.0
40,000

New tenant (left axis)
96,294Previous tenant (left axis)
91,394
Increase/decrease rate
83,962
83,772(right axis)

75,943
69,262
59,04255,05416.0
66,104

8.9

12.0

8.0

7.2

20,000

-15.0

16.0

14.9
56,967

9.6

（%）
20.0

4.0

Increase rate
-20.0

Decrease rate

-22.7
-22.7
-25.0

-21.2

Rent increase/decrease rate

0

14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th
Period Period Period Period Period Period Period Period Period Period Period Period Period(Note) Indicates rent increase/decrease rate against contract rents before the renewals for lease contracts
whose contract renewal periods have arrived in the above periods and whose rent renewals have been
agreed. Rent increase/decrease rate is calculated based on net amount for increased/decreased rents.

0.0

22nd Period

23rd Period

24th Period

25th Period

26th Period(Note) Compared monthly rent before and after tenant replacement for the same leasing areas. The rate isbased on total monthly rent.

Improvement in Financial Standing■ Monthly Rent Increase Due to Contract Renewal/New Lease(Financial Standing)(Thousand yen/month)
30,00025,000Contract Renewal

25,528

New Lease

6,680

20,0005,000

21,804 21,309
7,432 12,521

14,246
18,847766 12,747
14,371
6,438 13,479
3,988

14,37615,00010,00028,225
9,137

9,020
3,157
5,862

12,141
8,787

8,759

7,938

0

19th
Period20th
Period21stPeriod22nd
Period23rd
Period24th
Period

18,407
19,087 6,265

25th
Period■ Increase in Dividend Resource Due to Improved Financial Standing
Simple19th 20th 21st 22nd 23rd 24th 25th 26th averageof eight
Period Period Period Period Period Period Period Period fiscal
periods

Percentage of 6-month 0.7% 1.0% 0.8% 0.7% 1.4% 1.2% 1.2% 1.5% 1.0%
Total Rent
conversion
Revenue(rents and
12-monthcommon area conversion 1.3% 2.0% 1.7% 1.5% 2.8% 2.4% 2.3% 3.0% 2.1%
fees) (Note 1)
Growth rate of 6-month 1.5% 2.1% 1.8% 1.5% 2.9% 2.4% 2.3% 2.9% 2.2%
conversion
dividend
resource
12-month 3.0% 4.3% 3.6% 2.9% 5.8%
4.9% 4.7% 5.8% 4.4%
(Note 2)conversion

26th
SimplePeriod average ofeight fiscal periods(Note 1) The figures are calculated by dividing the rent increase due to improvement in financial standing each period (monthly rent increase X 6 months) by rents and common area fees income in the immediately prior fiscal
period.
(Note 2) The figures are calculated by dividing the rent increase due to improvement in financial standing each period (monthly rent increase X 6 months) by net income in the immediately prior fiscal period.

I. Overview of Daiwa Office Investment Corporation

9

Internal Growth Measures“Bonji-Tettei”
Continuous internal growth and maximization of asset value through “Bonji-Tettei”“Bonji-Tettei”
Accurate grasp of present
situations◦Accurate understanding of the leasing market◦Grasping of needs and trends of occupying tenants through regular visits◦In-depth understanding of property features

Activities for internal growth◦Information gathering from brokers◦Implementing tenant satisfaction surveys and proposing improvement measures◦Periodical property examination

Realization of internal growth◦Maintenance of a stable occupancy rate by promptly filling vacancies◦Realization of stable management through solid relationship with tenants◦Securement of revenue based on well-planned medium- to long-term management

Aims to maximize asset value
Office Management Team
(8 members)

Aims at maximizing asset value
through efforts of the specialist
group by assigning personnel incharge to each property in DOI's
portfolio.

Hiroshi Udagawa Takafumi Ushiku Kotaro Ishii

Jun Arai

Chie Kamimura

Yuuki Kobatake

Jun Iwasaki

Takeshi Morikawa

Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
work history:
work history:
work history:
work history:
work history:
work history:
work history:
work history: 2 months
12 years 6 months
14 years 4 months
12 years 9 months
12 years 9 months
12 years 7 months
6 years 3 month
2 years 3 months

Construction Management
Team (5 members)
Investment Planning Team

Engineering: Formulation and implementation of construction planning of the assets
Middle office work: Budget and performance management for the portfolio(4 members)(Note) The numbers of members are the figures as of end of January 2019. “Asset Management work history” is the number of years engaged in the relevant work (as of end of January 2019) and does not indicate the number ofyears employed at the asset management company.

Occupancy Status of Properties Subject to Leasing Improvement in the Fiscal Period Ended November 2018 (26th FP)■ CONCURRED Yokohama (Acquisition price: 38,100 million yen)

■ Square Daikanyama (Acquisition price: 2,280 million yen)

100.0(%)

95.9
90.0

100.0(%) 100.0

99.3

100.0

80.0

93.2

Upon acquisition

60.0
40.0

80.0

20.0
70.0

0.0
’17/11

’18/2

’18/5

’18/8

’18/11• Property is located near Yokohama Station and successfully reflects multiple needs with
its transportation convenience of being accessible to multiple lines and its high grade.
Also received applications for occupancy of the remaining 68.60 tsubos of area andlease contracts are scheduled to be concluded.
100• Occupancy rate as of the end of the 26th FP is 99.3%.

’17/11

’18/2

’18/5

’18/8

’18/11’19/2• Advertised to a broad area between Daikanyama and Shibuya utilizing the limited supplyof buildings that can be entirely leased in Daikanyama. Received multiple applications
for occupancy and concluded contract for the entire property. Unit rent increased without
downtime.
• Forecasted occupancy rate as of the end of February 2019 is 100% 100
8090

Leasing Highlight and Properties Subject to Leasing Improvement in the Fiscal Period ending May 2019 (27th FP)
60
40

80

Properties Subject to Leasing Improvement

1070■ Kita-Shinagawa Gotenyama Building (Acquisition price: 2,500million yen)

■ Daiwa Jingumae (Acquisition price: 2,800 million yen)

• Needs for back-offices fromlarge companies around
Shinagawa Station centering onneeds for bases from companies
covering from Southern Tokyo tothe airport and bay area are
assumed.
• Aim for early lease-up by improving
the management system
immediately after the acquisition
and utilizing the leasing network.

• A property with suitablyrefined design as well asstately appearance in the
Aoyama area where
redevelopments for the
Tokyo Olympic Games areunderway.
• Aim to conclude contracts at
a higher unit rent by utilizing
free rent if necessary.

200■ Glass City Shibuya (Acquisition price: 16,000 million yen)
• Needs from creative tenants such as
IT-related, worker dispatch business andmusic and video-related tenants are
assumed.
• The Property has a rectangular and regularshaped typical floor with no pillars and iscompetitive due to flexible layout andefficient use.
• Aim to attract tenants that can occupy theProperty over the medium-to long-term
while receiving multiple inquiries.

Measures Taken in 24th Fiscal Period and After
Various major indices improved due to asset replacement, internal growth and effective utilization of 30 billion yen of surplus funds■ Changes in Major Indices after Portfolio Replacement
Various major indices of the portfolio improved from 24th Fiscal Period to 26th Fiscal Period by asset replacement, internal growth and effective use of 30
billion yen of surplus funds.
Major IndicesEnd of 24th FP ended
November 2017

Properties sold during 25th
FP ended May 2018

Properties acquired during 25th
FP ended May 2018 and 26th FP
ended November 2018

End of 26th FP ended
November 2018

Number of property (Note 1)

54 properties

2 properties

5 properties

58 properties

Total Assets

469,341 million yen

72,200 million yen

62,595 million yen

459,736 million yen

NOI Yield (Note 2)

4.0%

3.2%

4.3%

4.4%

Ratio of Investment inShinjuku Maynds Tower (Note 3)

28.5%(total acquisition price basis)

NAV per unit (Note 4)
LTV

14.6%
Shinjuku
Maynds Tower

640,587 yen

Daiwa Meieki

CONCURRED
Yokohama

Daiwa Kanda East

Prime Kanda Building

Kita-Shinagawa
Gotenyama Building

673,841 yen
41.5%

42.3%

Investment Units Issued
and Outstanding

497,869 units

Distribution per unit

10,957 yen

Sasazuka NA Building

491,877 units
11,997 yen(Note 1) Among the properties sold during the 25th FP, Shinjuku Maynds Tower was sold partially and thus counted the remaining ownership as one property in the number of properties at the end of the 26th FP.
(Note 2) NOI Yields are calculated as follows. Numerator: Annualized NOI does not include costs related to DOI. Figures for the end of the 24th FP and the end of the 26th FP are the annualized actual NOIs for the fiscal
period, figure for the NOI of properties acquired during the 25th FP and the 26th FP is the expected NOI for the 27th FP annualized, figure for the NOI of assets sold during the 25th FP is the actual NOI of the24th FP annualized. Denominator: Book values as of the end of the 24th FP and as of the end of the 26th FP are the book values as of the end of each fiscal period, and book values of properties acquired
during the 25th FP and 26th FP are the acquisition prices.
(Note 3) The ratio of investment in Shinjuku Maynds Tower is the ratio of Shinjuku Maynds Tower’s acquisition price to the total acquisition price.
(Note 4) NAV per unit = (Unitholders’ capital + Total appraisal value at the end of fiscal period − Total property book value at the end of fiscal period) / Number of investment units issued and outstanding.

■ Use of 30 Billion Yen of Surplus Funds• 30 billion yen of surplus funds generated with the asset replacement in the 25th FP.
• Conducted the following actions totaling approximately 39.32 billion yen by the end of the 26th FP.
Use of Funds

1. Allot toacquisitionof newproperties

Amount[Prime Kanda Building: Kanda Suda-cho, Chiyoda-ku (1-minute walk from Iwamotocho Station on the Toei Subway
Shinjuku Line)]
Acquisition date: June 7, 2018, Acquisition price: 1.8 billion yen
Acquisition date: November 1, 2018, Acquisition price: 0.495 billion yen[Kita-Shinagawa Gotenyama Building: Kita-Shinagawa, Shinagawa-ku (1-minute walk from Kita-Shinagawa Station on
the Keikyu Line)]
Acquisition date: September 13, 2018, Acquisition price: 2.5 billion yen[Sasazuka NA Building: Sasazuka, Shibuya-ku (4-minute walk from Sasazuka Station on the Keio Line and Keio New Line)]
Acquisition date: October 30, 2018, Acquisition price: 15.5 billion yen

2. Allot to
repayment ofloans[Repayment/early repayment of 15.35 billion yen in total to 8 lenders]• Repayment of 1.85 billion yen in total to 3 lenders (implemented on February 28, 2018)• Early repayment of 2.00 billion yen to 1 lender (implemented on March 30, 2018)• Early repayment of 11.50 billion yen in total to 5 lenders (implemented on April 27, 2018)

3. Allot to sharebuybacks• Number of investment units acquired: 5,992 units• Total acquisition price: 3,675,523,000 yen

Approx. 20.29 billion yen

15.35 billion yen
Approx. 3.67 billion yen

Total

Approx. 39.32 billion yen
I. Overview of Daiwa Office Investment Corporation

11

External Growth Measures
Investment in selectively-chosen, high-quality competitive properties even in a harsher acquisition environment

Acquisition Performance in 26th Fiscal Period■ Newly Acquired Propertieson
Kita-Shinagawa Gotenyama Building [Acquired
September 13, 2018]①[Acquired on June 7, 2018]
Prime Kanda Building ②[Acquired on November 1, 2018]

Daiichi Keihin

Akihabara Station
Akihabara Station

anote Lin

Kita-Shinagawa
StationKita-Shinagawa
Gotenyama Building

JR Yam

Nippon Manpower Building

Tokyo Metro Marunouchi Line

Daiwa
Shinagawa North

Iwamotocho Station

Prime Kanda
Buildinguee/JR Tokaido M
Tokaidoain Line
Shinkansen

Awajicho
StationLine
HibiyaMetroTokyo

Ogawamachi
Station

JR Chuo Linee
Main Lin

Kita-Shinagawa,Shinagawa-ku, Tokyo
Site Area
602.41m2
Structure/Floor SRC/S/8F
Total Floor Area 2,897.64m2
Acquisition Price 2,500 million yen
Location

Toei Shinjuku Line

Kyu-Kaigan Aven

KeikyuTokyo Marriott Hotel

JR Ya
Keihin manote Line/
TohokuLine

Shinagawa
StationKanda Station
Daiwa Kanda
Mikuracho Building

2,620 million yen

Appraisal Value(as of June 1, 2018)

Construction Date July 1992
Occupancy Rate 86.2%(as of acquisition)
Number of Tenants 4 (as of acquisition)• Located a 10-minute walk from Shinagawa Station on the JR Yamanote
Line, JR Keihin Tohoku Line and JR Tokaido Line and a 1-minute walk from
Kita-Shinagawa Station on the Keikyu Line.
• A leasable area of approximately 100 tsubos per floor is secured with 2,550mm typical floor celling height, 50 mm OA floors and facilities including
individual air conditioners.
• It has rectangle-shaped (roughly regular-shaped) rental spaces with sidecore design, thus offering excellent layout flexibility and usability.

Kanda Suda-cho,
Chiyoda-ku, Tokyo
Site Area
302.42m2
Structure/Floor S/RC/B1/10F
Total Floor Area 2,435.80m2
million yen
Acquisition Price ①1,800million yen②495
Location①1,940 million yen

AppraisalValue(as of May 1, 2018)②604 million yen(as of October 1, 2018)

Construction Date

August 1990
①100.0%(as of acquisition)
Occupancy Rate
②100.0%
Number of Tenants ①6 ②3 (as of acquisition)• Located a 1-minute walk from Iwamotocho Station on the Toei Subway
Shinjuku Line, a 7-minute walk from Akihabara Station on the JR Yamanote
Line and Keihin Tohoku Line, a 4-minute walk from Akihabara Station on
the Tokyo Metro Hibiya Line, an 8-minute walk from Kanda Station on the
JR Yamanote Line, Keihin Tohoku Line and Chuo Line as well as a 6-minute
walk from Kanda Station on the Tokyo Metro Ginza Line.
• A leasable area of approximately 70 tsubos per floor is secured and isequipped with OA floors, individual air conditioning and other facilities.
• Since the office space is without pillars, superior in flexible layouts andefficient use.
(Note) The Property is entirely owned through acquisitions made in two stages on June 7 and November 1,
2018.

Sasazuka NA Building [Acquired on October 30, 2018]

Acquisition Performance in 27th Fiscal Period
Sasazuka South Building [Acquired on December 27, 2018]

Kaido

e

Avenu

New

Line

Sasazuka NA Building

a Do

K

nan

/Keio

ine
eio L

Kan

Koshu

aido

ri

K
Koshu

Sasazuka Station

e

Avenu

Sasazuka Station

Keio

/Keio

Line

New

Line

Sasazuka NA
Building

Sasazuka South
Building
Daitabashi
StationLocation
Sasazuka, Shibuya-ku, Tokyo
4,795.26m2
Site Area
Structure/Floor SRC/RC/S / B2/18F
Total Floor Area 26,527.62m2
Acquisition Price 15,500 million yen

million yen
Appraisal Value 16,100(as of October 1, 2018)
Construction Date February 1993
Occupancy Rate 100.0% (as of acquisition)
Number of Tenants 5 (as of acquisition)• Located a 4-minute walk from Sasazuka Station on the Keio Line and Keio
New Line. Excellent location from the point of proximity to the terminal
station considering that Sasazuka Station is only 5 minutes from Shinjuku
Station.
• A leasable area of approximately 215 tsubos per floor is secured with 2,650
mm of typical floor celling height and 70 mm of OA floor.
• The office has a regular-shaped rental space, offering excellent layout
flexibility and usability.
• The aboveground portion is divided into the high-rise building with 18
floors above ground (office/store) and the low-rise building with three floors
above ground (fitness/store). Both buildings are connected through theunderground portion and an access-way has also been established on thesecond floor above ground.

12

Location
Sasazuka, Shibuya-ku, Tokyo
Site Area
1,001.88m2
Structure/Floor SRC/S / B1/8F
Total Floor Area 5,400.70m2
Acquisition Price 3,000 million yen

million yen
Appraisal Value 3,300(as of December 1, 2018)
Construction Date December 1991
Occupancy Rate 100.0% (as of acquisition)
Number of Tenants 9 (as of acquisition)• Located a 7-minute walk from Sasazuka Station on the Keio Line and Keio
New Line. Excellent location from the point of proximity to the terminal
station considering that Sasazuka Station is only 5 minutes from Shinjuku
Station.
• A leasable area of approximately 167 tsubos per floor is secured with 2,600mm of typical floor celling height, 70 mm of OA floor, individual airconditioning system, etc.
• The office has no pillars within the rental space, which enables to offer
excellent layout flexibility and usability.

Current Portfolio and Acquisition Policy
DOI will invest in competitive properties based on in-depth data analysis upon careful selection from among the vast information on properties obtained
through diverse sourcing.
■ Distribution Chart of Portfolio Properties■ Acquisition Policy* Distance to station is indicated by calculating 80m as
one minute

Building age (Years)
60• Place priority on the Five Central Wards of Tokyo and equivalent areas.
• Thoroughly select properties in view of actual demand toward location (distance tostation, station power, crowd attraction, surrounding environment), building specs, etc.

55

• Target properties to improve stability and profitability of our existing portfolio.

50

Properties acquired in the 26th FP
Properties acquired in the 27th FP
Properties acquired after sponsor change
Properties acquired before sponsor change• Invest in buildings with an age of less than 25 years.
45■ Sale Policy

40• Consider replacement of properties if necessary through sale in light of properties’
future competitiveness, profitability, etc.

35
Prime Kanda Building■ Number of Properties Reviewed for Acquisition(cases)
500

416

400
300

356
296
26

15

100

100

344

289

200

0

393

288

31

23

20
15

60

10

40

29

20

19

18

12

Sasazuka NA Building

80

329

320

276

Kita-Shinagawa
Gotenyama Building

25* Number of gross proposals (cases)

Number of properties reviewed (left axis)
Number of properties reviewed in detail (right axis)

SasazukaSouth Building

30

14

20

5

0

0

17th Fiscal 18th Fiscal 19th Fiscal 20th Fiscal 21st Fiscal 22nd Fiscal 23rd Fiscal 24th Fiscal 25th Fiscal 26th Fiscal
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriod

0

1

2

3

4

5

6

11
8
9
10
Distance to station (minutes)

7

Changes in Asset Size and Acquisition Performance
Aim to achieve medium-term goal of an asset size of 500 billion yen.
(Billion yen)
550

(%)
80.0
Total Acquisition Price (left axis)

LTV (based on total assets) (right axis)

500. 0

500

445.7

450

350

311.3
278.1

313.2 314.9

332.0

352.7

287.3

250
200

34.0
28.1

Acquisition
property
150

34.2

34.4

37.5

28.9

• Daiwa Nishi-Shimbashi• Daiwa Kudan

0

469.3
439.4

459.7

462.7

Acquisition property

Acquisition property• E SPACE
TOWER• Daiwa Osaki
3-chome

364.0

40.6

43.0

40.2

Acquisition property• Daiwa Azabu
Terrace• Daiwa Kitahama

Acquisition property

Acquisition property• Daiwa Kayabacho• Daiwa Jinbocho3-chome• Daiwa
Nihonbashi
Hongokucho• shinyon curumu• Daiwa Meieki• Daiwa Kamiooka

60.0

50.0

44.3

• Daiwa Shibuya
Dougenzaka• Daiwa Akasaka• Daiwa Shibuya
Miyamasuzaka

Acquisition property

70.0

387.5

Acquisition property

100
50

469.3

413.2

400

300

458.3

467.7

41.7

43.3

Acquisition property• Daiwa River Gate
• Daiwa Hatchobori
ekimae• Daiwa Hatchobori
ekimae West

Acquisition property• Daiwa Ebisu
4-chome• LAQUAS Higashi
Acquisition property
Shinjuku• Integral Tower • Daiwa Aoyama• Shinsen Place• Glass City Shibuya• Daiwa Meguro
Square

42.3

42.2

42.3

Acquisition property

40.5

41.5

Acquisition property• Daiwa
Higashinihonbashi• SquareDaikanyama
Building• Shinjuku West
Building• Daiwa Ogikubo

Acquisition property

Acquisition property• Daiwa
Nishi-Shinjuku• Kirin Nihonbashi
Building• Daiwa Kanda
Mikuracho
Building

41.9

40.0

Acquisition property• CONCURRED• Sasazuka South
Yokohama
Building• Daiwa Kanda East

30.0

Acquisition property

20.0• Kita-Shinagawa
Gotenyama Building• Sasazuka NA Building• Prime Kanda Building

10.0

0.0

10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
As of
Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period the end ofJanuary 2019

Mediumterm goal

I. Overview of Daiwa Office Investment Corporation

13

Financial Conditions
Reduce refinancing risk by extending borrowing periods and diversifying repayment dates

Status of Interest-Bearing Liabilities (As of November 30, 2018)
During the 26th Fiscal Period, DOI took out long-term borrowings of 10 billion yen in total to raise funds for the acquisition of new
properties, and refinanced 5.5 billion yen of matured existing loans, successfully diversifying repayment dates. DOI will continue tofocus on stable financial management.
■ Interest-Bearing Liabilities(Billion yen)
280

(%)
70.0
Interest-bearing liabilities (left axis)

240

60.0

LTV (based on acquisition price) (Note) (right axis)

200

50.0

Medium-to-long term, upper-limit LTV target range

41.5

160
120
80

■ Change in Remaining Years at Time of
Procurement of Interest-Bearing Liabilities(Years)10.0
9.0

8.5 4.2

8.0

4.5
4.0

7.0

3.5

6.0

3.0

5.0

2.5

30.0

4.0

2.0

20.0

3.0

40.0

2.0
40

10.0

0

0.0
End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

1.0
0.0

1.5
1.0

Average remaining years at the time of procurement
during the 26th Fiscal Period (left axis)
Average remaining years at the time of procurement during the26th Fiscal Period (excluding short-term borrowings) (left axis)

0.5
0.0

14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th
Period Period Period Period Period Period Period Period Period Period Period Period Period(Note) LTV (based on acquisition price): Total interest-bearing liabilities / Total acquisition price of properties(Note) Dotted line indicates average remaining years at the time of procurement during
the 26th Fiscal Period excluding short-term borrowings.

■ Diversification of Repayment Dates■ Balance of Borrowings by Financial Institution(Million yen)
20,000Investment corporation bond

16,00012,000

8,000

4,000

0
27th 28th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd 43rd 44th
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period■ Ratio of Fixed- to
Floating-Rate Borrowings■ Ratio of Long- to
Short-Term Liabilities

End of 26th
Fiscal Period

End of 26th
Fiscal Period

29.4%

70.6%

10.6
%

89.4%

Fixed interest rates

Long-term borrowings

Floating interest rates

Short-term borrowings andcurrent portion of long-termborrowings■ Status of Rating
Rating agency

Rating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)

14(Years)
5.0

Average years remaining at the period end (right axis)

Target rating

LenderSumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank
Development Bank of Japan
MUFG Bank, Ltd.
Mizuho Bank
Shinsei Bank
Resona Bank
Mizuho Trust and Banking
The Bank of Fukuoka
Kansai Urban Banking Corporation
Aozora Bank
Nishi-Nippon City BankThe Gunma Bank
The 77 Bank
The Musashino Bank
Tokio Marine & Nichido Fire Insurance
The Yamaguchi BankORIX Bank Corporation
Nippon Life Insurance Company
The Kagawa Bank
The Higashi-Nippon Bank
Taiyo Life Insurance Company
Fukoku Mutual Life Insurance
Investment Corporation Bonds
Total

Balance (mm yen)

39,40023,50021,75021,50019,40014,00012,500
9,500
5,500
5,000
3,000
3,000
2,500
2,000
2,000
2,000
2,000
1,500
1,300
1,000
1,000
300
200
5,100
198,950

RatingRating outlook

Issuer rating

A+

Positive

Long-term issuer rating

AA−

Positive

Share

20.3%
12.1%
11.2%
11.1%
10.0%
7.2%
6.4%
4.9%
2.8%
2.6%
1.5%
1.5%
1.3%
1.0%
1.0%
1.0%
1.0%
0.8%
0.7%
0.5%
0.5%
0.2%
0.1%
100.0%

ESG Measures
Realize stable and sustainable growth through intensifying efforts on ESG

Concepts of Efforts
Environment

SocialGovernance• Establishment of environmental policies and holdingof sustainable committee• Monitor environmental performance of its portfolio
properties, improvement of environmental
performance and obtainment of evaluation fromexternal parties• Improve environment of surroundings and promote
installation of LED lighting through green leasing• Build more desirable relationships with various
stakeholders including tenants, employees,
unitholders and lenders• Communication with local communities• Transparency in management• Strictly disciplined investment policies• Highly-professional dedicated human resources

Sustainability Realize sustainable growth that is stable over the super long-term

Environment■ Establishment of Environmental Policies
DOI established environmental policies that compile policies on environmental efforts in January 2012
■ Establishment of Sustainable Committee

Members: President and Representative Director (chairman), Chief Division Officers, Deputy Chief Division
Officers and General Managers of respective department
Secretariat: Asset Management Department and Customer Relations Department
Detail: Consider and devise individual policy, goals and various measures related to sustainability
Frequency: Hold twice or more per year

DOI’s Asset Manager has been holding “sustainablecommittee” meetings that discuss various
sustainability-related topics since June 2014

Social■ Efforts for Enhancing Tenant Satisfaction■ Coexistence with Local Communities

Giving Out Novelty Goods/Shinjuku Maynds Tower

Shinjuku Minami Lumi/Shinjuku Maynds Tower• Held “Shinjuku Minami Lumi,” an event to illuminate Shinjuku South Exit
area, jointly with Odakyu Electric Railway, Takashimaya, East Japan
Railway and Asahi Mutual Life Insurance for six consecutive years since2013.

• Give out annual (around December) Shinjuku Maynds
Tower desk calendars. The aim is to improve a sense ofaffinity among office workers of its tenants toward
Shinjuku Maynds Tower.

■ Efforts for Employees
Improving Work Environment/ Daiwa Ginza• Substantially expanded open space and secured community space for
employees to relax or have meetings. The aim is to enable fruitfulcommunications among employees.

GovernanceCompliance
Committee

Board of Directors

Executive Committee

Deliberation/
Resolution

Deliberation/
Resolution or
ReportApproval
or Report

Board of Directors

Determined the basic items concerning compliance

Compliance Officer

Compliance
Committee

Internal Control
OfficeRole

Investment
Committee
Deliberation/
Resolution

Departments Responsible for Compliance System• Planning, proposal andpromotion of compliance• Uniﬁed management ofcompliance issues• Deliberation and resolutionof items concerningcompliance• Implementation of internal
inspection• Securement of internal
control environment

Characteristics

Compliance Officer

Strictly complying with various laws and regulations, rules and internal rules related
to business as well as focusing on sincere and fair corporate activities based
sufficiently on social norms

Examination/
Approval

The Asset Manager of DOI strives to prevent conflicts ofinterest, manage risks and comply with laws and regulations
by establishing a governance system placing the highest
priority on compliance.
Decision-Making Flow in Transactions with Related Parties
Related Departments■ Compliance System

Drafting■ Corporate Governance• Maintained and managed
information by also
serving as information
security control manager• Deliberation by members
including two external
committee members
familiar with compliance• Resolution requiring
unanimous approval• Securement of completely
independent internalmanagement system

I. Overview of Daiwa Office Investment Corporation

15

Description of Asset Manager

Organization of Asset Manager (As of January 1, 2019)■ Description■ Directors and Auditors

Company Name
Address
Established
Paid-in Capital
President
Board of Directors
No. of Employees
Registration of Financial
Instruments Business Operator
Building Lots and Buildings
Transaction Business License
Discretionary Agent for Real
Estate Transaction Approval
Association MembershipDaiwa Real Estate Asset Management Co., Ltd.
6-2-1 Ginza, Chuo-ku, Tokyo
October 21, 2004
200 million yen
Akira Yamanouchi
10
Executive directors: 5; Executive auditor: 1
Non-executive directors: 2; Non-executive auditors: 2
108 (excluding dispatched employees)
Registration No. 355 (Financial Instruments), Director-General,
Kanto Local Finance Bureau (Kinsho)
License No. (3)-83920, Governor of Tokyo
License No. 34, Minister of Land, Infrastructure, Transport andTourism
Member of The Investment Trusts Association, Japan
Member of Japan Investment Advisers Association
Member of Type II Financial Instruments Firms Association

President and Representative Director
Vice President and Representative
Director
Vice President and Representative
Director
Executive Managing Director
Director
Director (non-executive)
Director (non-executive)
Auditor
Auditor (non-executive)
Auditor (non-executive)■ Organizational
Chart

Akira Yamanouchi
Yuji Shinotsuka
Yoshiki Nishigaki
Toshio Fukushima
Hajime Imbe
Mikita Komatsu
Keiichi Ishikawa
Tamaki Shibayama
Morimasa Matsuda
Shinji Kiso

Shareholders’ Meeting
Corporate Auditors
Board of Directors

Compliance Committee

Compliance Officer

Investment Committee
President andRepresentative Director
Acquisition and Asset Management Division
Acquisition
Department

Origination
Department

OfficeInvestment Team
Residential
Investment Team
Healthcare
Investment TeamHotelinvestment team
JRH Investment
Team

Asset
Management
Department
OfficeManagement Team
Residential
Management Team
Healthcare
Management TeamHotelmanagement team
Investment
Planning Team
Construction
Management Team

Private Fund Division
JRH Asset
Management
Department

Private FundManagement
Department

Internal Control Office

Corporate Division
Customer
Relations
Department

Finance
Department

AM TeamFinance Team

Portfolio
System Team

Accounting Team

Administration
Department

Corporate
Planning
Department

Compliance &Risk Management
Department

Management
Team

Structure
Asset Manager
General Administrator
related to the operation of theadministrative instruments
Daiwa Real Estate AssetManagement Co., Ltd④①

Investment Corporation②

General Administrator
Asset Custodian
Sumitomo Mitsui Trust Bank, Limited

General Meeting of Unitholders
Officers
Executive Director: Motoi Takahashi
Supervisory Director: Takayuki Hiraishi
Supervisory Director: Hiroshi Sakuma

Supporting Company

Accounting Auditor

Daiwa Securities Group Inc.

KPMG AZSA LLC① Asset management contract/General administration affairs contract related to operationof administrative instruments② General administrative affairs contract/Asset custodian contract③ Unitholder register, etc. management contract/Special account management contract③⑤

Manager of Unitholder
Registry, etc.
Special Account Management
Institution
Sumitomo Mitsui Trust Bank, Limited

General Administrator(Investment Corporation Bonds)
Sumitomo Mitsui Banking Corporation
Resona Bank, Ltd.

④ Sponsor support agreement⑤ Fiscal agency agreement(Note) The specified affiliated juridical person (meaning a specified affiliated juridical person as provided in Article 12, Paragraph 3 of the Cabinet Office Ordinance on Disclosure of Information, etc. on Specified
Securities (Ordinance of the Ministry of Finance No. 22 of 1993; including amendments thereto)) of DOI is Daiwa Securities Group Inc. Daiwa Securities Group Inc. is the Asset Management Company’s parent
company (meaning a parent company as stipulated in Article 8, Paragraph 3 of the Ordinance on Terminology, Forms and Preparation Methods of Financial Statements, etc. (Ordinance of the Ministry of Finance
No. 59 of 1963; including amendments thereto))16II. Asset Management Report
1. Management Status and Other Performance Highlights Data
Fiscal Period

26th Period 25th Period 24th Period 23rd Period 22nd Period

June 1, 2018 From Dec. 1, 2017 From June 1, 2017 From Dec. 1, 2016 From June 1, 2016
( From
To Nov. 30,2018 )( To May 31, 2018 )( To Nov. 30, 2017 )( To May 31, 2017 )( To Nov. 30, 2016 )(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
13,194
13,441
12,735
12,547
12,853
Rental revenues
13,164
12,86912,71812,513
12,687
Operating expenses
6,658
6,762
6,558
6,414
6,710
Property-related expenses
5,345
5,410
5,279
5,151
5,433
Operating income
6,536
6,679
6,177
6,133
6,143
Ordinary income
5,902
5,888
5,456
5,360
5,325
Net income
5,901
5,887
5,455
5,359
5,325
(2) Properties, etc. (as of end of period)
Total assets
479,213467,040
483,173483,731483,451[period-on-period percentage changes][+2.6%][−3.3%][−0.1%][+0.1%][+1.4%]
Interest-bearing liabilities
198,950
188,950
204,300
204,300
204,300
Net assets
254,124
253,676
256,796
256,561
256,517[period-on-period percentage changes][+0.2%][−1.2%][+0.1%][+0.0%][+3.6%]
Notes 2
247,876
247,876
251,552
251,552
251,552
Unitholders’ capital, net(3) Distributions
Total distribution amount
5,901
5,484
5,455
5,359
5,325
Dividend payout
100.0%
93.2%
100.0%
100.0%
100.0%(4) Per Unit Information
Total number of units issued (units)491,877
491,877
497,869
497,869
497,869
Net assets per unit (yen)516,642515,731515,790
515,318
515,231
Distribution per unit (yen)11,997
11,15010,957
10,764
10,695Distribution amount from earnings per unit (yen)11,997
11,15010,957
10,764
10,695Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
1.2%
1.2%
1.1%
1.1%
1.1%
ROA
Notes 3and4[annual rate][2.5%][2.5%][2.3%][2.2%][2.2%]
2.3%
2.3%
2.1%
2.1%
2.1%
ROE
Notes 4and 5[annual rate][4.6%][4.6%][4.2%][4.2%][4.2%]
Capital ratio
53.0%
54.3%
53.1%
53.0%
53.1%
[period-on-period percentage changes][−1.3%][+1.2%][+0.1%][−0.0%][+1.1%]LTV (loan to value)
41.5%
40.5%
42.3%
42.2%
42.3%
Note 6
Property leasing cash flows (NOI)
9,553
9,231
9,208
9,133
9,004
(6) Other Referential Information
Number of investment properties
58
55
54
54
53
Note 7
624
606
580
577
558
Number of tenants
360,958.95 340,144.07 338,377.31 338,436.22 336,722.04
Total rentable area (m2)
Note
8
98.9%
99.0%
98.2%
97.7%
97.7%
Occupancy rate
Depreciation
1,734
1,772
1,769
1,771
1,750
Capital expenditures
1,738
1,564
536
824
993
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)Operating revenues, etc. do not include consumption taxes, etc.
Unitholders’ capital, net: Unitholders’ capital − Deduction from Unitholders' Capital
ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100
Figures for the 22nd Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 23rd Fiscal Period are the annualized figures calculated based on 182 days of management.
Figures for the 24th Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 25th Fiscal Period are the annualized figures calculated based on 182 days of management.
Figures for the 26th Fiscal Period are the annualized figures calculated based on 183 days of management.
ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100
Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation
Number of tenants is the number of end tenants. When there is a tenant occupying multiple buildings, the concerned tenant iscounted and stated for each individual building.
Occupancy rate: Total leased area ÷ Total rentable area

II. Asset Management Report17

2. Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred
to as “DOI”) was established on July 11, 2005 in accordance with the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951; including amendments thereto) with Daiwa Real Estate AssetManagement Co., Ltd. (former name K.K. daVinci Select) (the “Asset Manager”) as the organizer. After its
establishment, DOI implemented an additional issuance of investment units through a public offering (99,600
units) on October 18, 2005 and then listed on the Tokyo Stock Exchange, Inc. (TSE) Real Estate Investment
Trust Section (stock code: 8976) on the following day.
Though initial assets under management were 79,573 million yen (sum total of acquisition price),
subsequent activities, such as additional acquisition of properties and replacement of portfolio properties,
resulted in the assets under management amounting to 459,737 million yen as of the last day of November
2018.
DOI strives to secure stable revenue and sustained growth of the investment assets based on a clear
portfolio development policy of specializing in investment in office buildings, with a particular focus on
investment in a total floor area of more than about 2,000m2 situated in downtown Tokyo, as well as throughdedicated efforts to heighten tenant satisfaction levels.
(2) Investment Environment and Management Performance(A) Investment Environment (from June 2018 to November 2018)
The Japanese economy during the fiscal period under review saw real GDP growth rate (Second
Preliminary Estimates) for July to September 2018 at an annual rate of -2.5%, falling after a temporary
standstill in the recovery trend that had continued for eight consecutive quarters under the ongoing
quantitative/qualitative monetary easing policy by the Bank of Japan.
In the office building leasing market in central Tokyo, with new supply having settled down, the vacancy
rate took a turn after peaking in June 2013, dropping to 1.98% at the end of November 2018. Led by
improvement in the vacancy rate for existing large buildings, the overall vacancy rate that includes smallto medium-sized buildings also continues to be on an improving trend. The drop in the vacancy rate has
led to an increase in office rent in some areas, and the market as a whole continues to see increase inrent, albeit slight.
For the office building transaction market, a strong appetite for property acquisitions continued among
real estate companies, funds (including J-REITs) and oversea investors with the continuing proactive
lending attitude by financial institutions.
(B) Management Performance
In view of increasing the ordinary EPS (EPS (net income per unit) after deducting gain on sales fromproperties) over the medium to long term, DOI continued to work on “external growth,” which aims toboost revenue through acquisition of properties, and “internal growth,” which aims to maximize income
generating from owned properties.
Concerning external growth, DOI acquired “Prime Kanda Building” (acquisition price: 2,295 million yen
in total) in June and November 2018, “Kita-Shinagawa Gotenyama Building” (acquisition price: 2,500
million yen) in September 2018 and “Sasazuka NA Building” (acquisition price: 15,500 million yen) in
October 2018. As a result, DOI’s assets under management as of the end of the 26th Fiscal Period(November 30, 2018) totaled 58 properties, the sum total of acquisition prices of which amounted to459,737 million yen.
Concerning internal growth, while the office leasing market remained strong, DOI conducted proactive
leasing, such as capturing needs for floor expansion within the same property through strengthening
relationships with existing tenants and reinforcing collaboration with leasing brokers and property
managers. Consequently, the occupancy rate as of the end of the 26th Fiscal Period (November 30, 2018)
was 98.9%.

18

(3) Overview of Capital Procurement(A) Procurement of Capital for New Property Acquisitions and Repayment of Borrowings
In the 26th Fiscal Period, DOI made the following borrowings to fund the acquisition of new properties
and the repayment of borrowings.
・DOI took out loans of 1,000 million yen from Tokio Marine & Nichido Fire Insurance Co., Ltd. on July 31,
2018 to fund the repayment of loans of 1,000 million yen borrowed from the same company which were
due for repayment on the same day.
・DOI took out loans of 4,500 million yen in total from The Bank of Fukuoka, Ltd., Kansai Urban Banking
Corporation and Development Bank of Japan Inc. on August 31, 2018 to fund the repayment of loans of
4,500 million yen in total borrowed from the same banks that were due for repayment on the same day.
・DOI took out loans of 10,000 million yen in total from Mizuho Trust and Banking Co., Ltd., Sumitomo
Mitsui Banking Corporation, MUFG Bank, Ltd., Mizuho Bank, Ltd. and Sumitomo Mitsui Trust Bank, Ltd.
on October 30, 2018 to fund the acquisition of a new property (Sasazuka NA Building) acquired on thesame day.
(B) Status of Interest-Bearing Liabilities at End of the Fiscal Period under Review
As a result of the above, the balance of interest-bearing liabilities outstanding as of the end of the 26th
Fiscal Period (November 30, 2018) stood at 198,950 million yen in total (long-term debt: 193,850 million
yen; investment corporation bonds: 5,100 million yen). The balance of the current portion of long-term debt
stood at 18,000 million yen while that of investment corporation bonds stood at 3,000 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 26th Fiscal Period stands
at 4.2 years.
(4) Capital Expenditures during the 26th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures implemented
during the 26th Fiscal Period. Capital expenditures for the 26th Fiscal Period amounted to 1,738 million yen
and, when combined with the 473 million yen in repair expenses charged to the 26th Fiscal Period expenses,
totals 2,211 million yen in construction work were implemented.
Name of real estate
properties(Location)
Daiwa Akasaka(Minato-ku, Tokyo)
Daiwa Onarimon(Minato-ku, Tokyo)
Kirin Nihonbashi Building(Chuo-ku, Tokyo)
Other

PurposeUpgrading of air-conditioning system
Upgrading of air-conditioning system
Upgrading of air-conditioning system

PeriodFrom: Nov. 2016
To: Jun. 2018
From: Jun. 2018
To: Nov. 2018
From: Jun. 2018
To: Nov 2018

Construction
amount paid
(Millions of yen)
911
187
155
485

Total

1,738

(5) Overview of Financial Performance and Distributions
As a result of the management described above, DOI posted financial performance for the 26th Fiscal Periodof 13,194 million yen in operating revenue, 6,536 million yen in operating income, 5,902 million yen in ordinary
income and 5,901 million yen in net income.
Concerning distributions, it is planned that the amount equivalent to distributions from earnings would be
included in the amount of tax-deductible expenses based on application of special provisions for taxation of
corporation tax (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957;
including amendments thereto) (the “Special Taxation Measures Act”)). Accordingly, DOI decided to distributealmost the entire amount of unappropriated retained earnings (excluding fractions of the distribution amount perunit that are less than 1 yen), and declared a distribution amount per unit of 11,997 yen.

II. Asset Management Report193. Outlook for the Next Fiscal Period(1) Investment Environment
The Japanese economy going forward was expected to continue to expand backed by solid trends inpersonal spending against the backdrop of a favorable employment environment and the improved income
environment while the monetary easing policy implemented by Bank of Japan continued. However, the paceof growth is expected to stall temporarily due to factors which will slow export, such as the ending of
inventory accumulation in Japan and the U.S. and ECB’s announcement of plans to scale down quantitativeeasing. In addition, factors such as policies set out by the U.S. President Donald Trump, the downward swingof the Chinese economy, deterioration of European economy, rise of crude oil price, stricter overtime work
regulations and consumption tax hike scheduled for October 2019 may slow down the Japanese economy,
and are thus thought to require attention.
In the Tokyo office building leasing market, factors such as improvement in employment are stimulating
demand, resulting in the vacancy rate dropping. Improvement in corporate performance is forecasted toincrease demand for office floor space and rent is expected to continue rising moderately as a consequence.
In the office building transaction market, backed by the favorable financing environment, among otherfactors, the property acquisition appetite among investors overseas, real estate companies and funds(including J-REITs) is thought to remain strong.
(2) Future Management Policy and Tasks(A) Strategy for Managing Existing Properties
While office leasing market conditions remain strong, large-scale relocations to new buildings forconsolidation, etc. have become noticeable. Therefore, DOI intends to improve its skill in building
management by constantly attempting to grasp the latest tenant needs and market conditions, regularly
reviewing management systems and such in order to be able to promptly respond when secondary or
tertiary vacancies, etc. arise. Consequently, DOI will carry out operational management under the following
policies with an aim to enhance the competitiveness of existing properties and thereby increase the longterm EPS over the medium to long term.
(a) Maintain and raise occupancy rates
Concerning existing tenants, strive to reduce cancellation risks by improving the quality of buildings,
equipment and management system. In addition, concerning new tenants, strive to maintain and raiseoccupancy rates through the provision of highly satisfactory services from gaining deeper
understanding of tenant needs through proactive participation in the market.
(b) Maintain and raise profitability
Aim to secure stable revenue over the medium to long term through further strengthening good
relationships with existing tenants, as well as proactively tapping the needs of new tenants bydiscerning the market environment.
(c) Lower operational management costs
Strive to lower operational management costs based on maintaining office environments of hightenant satisfaction levels by implementing efficient operational management and reviewing systematicconstruction work by optimally leveraging the economies of scale achieved from proactively realizing
external growth.

20(B) Strategy for New Property Investments
DOI will invest in office buildings that have a total floor area of about 2,000m2 or more based on various
external growth strategies, while maintaining a balance with the asset acquisition environment andfinancing situation. In principle, considerations will focus on Tokyo as the investment target area, but DOI
will also consider investing in competitive properties in cities other than Tokyo from a viewpoint ofterritorially-distributed investments.
As pipeline support, in addition to expanding its own information-sourcing channels, DOI will continue tosearch for properties that meet its investment criteria by proactively gathering real estate transaction
market information through greater collaboration with the Asset Manager and Sponsor Group and utilizing
the Group’s extensive network of clients, partners, etc.
Furthermore, in the 26th Fiscal Period, DOI acquired “Prime Kanda Building,” “Kita-Shinagawa
Gotenyama Building” and “Sasazuka NA Building” located in Tokyo. DOI believes that acquisition of theseproperties will contribute to further stabilization and enhancement of the portfolio. DOI will continue to
strive to acquire properties in line with the investment strategy described above.
(C) Financial Strategy
DOI will conduct disciplined financial management of the following basic content.
(a) Control leverage by keeping the ratio of interest-bearing liabilities to total assets (LTV) within the rangeof 40% to 50% at maximum, taking into consideration also LTV based on the appraisal value, etc., as aprinciple.
(b) Diversify repayment deadlines, targeting 30.0 billion yen as the maximum amount of interest-bearing
liabilities that shall become due during any single fiscal period as a principle.
(c) Aim to have long-term loans account for at least 70% of balance of loans as a principle.
(d) Achieve diversification of lenders, which shall mainly be Japanese financial institutions.
(e) Pursuant to its fund management rules, maintain stability in its financial standing by managing
necessary funds, such as the amount equivalent to distributions paid, separately from working capital.
(D) Schedule of Capital Expenditures for the 26th Fiscal Period
The following are the principal capital expenditures arising from renovation construction work, etc.
currently planned for existing portfolio properties. Please note that the expected construction amountincludes portions that are expensed as a separate account item of accounting costs.

Name of real estate
properties(Location)

Integral Tower(Suginami-ku, Tokyo)
Daiwa Shibuya
Miyamasuzaka(Shibuya-ku, Tokyo)
Daiwa Higashi-Ikebukuro(Toshima-ku, Tokyo)
Daiwa Kojimachi 4-chome(Chiyoda-ku, Tokyo)
Daiwa A Hamamatsucho(Minato-ku, Tokyo)

PurposeScheduled
implementation
periodExpected construction amount(Millions of yen)TotalamountAmount paid
duringcurrent
periodTotalamountalreadypaid

Upgrading of airconditioning system(west side)

From: Jun. 2018
To: Jul. 2019

986

277

–

Repair of exterior walls

From: Mar. 2018
To: Jun. 2019

256

–

19

Repair of exterior walls

From: Feb. 2019
To: May 2019
From: Feb. 2019
To: May 2019
From: Nov. 2018
To: May 2019

50

–

–

45

–

–

40

–

–

Repair of exterior walls
Repair of exterior walls

II. Asset Management Report21III. Balance Sheets
As of November 30, 2018 and May 31, 2018

(Thousands of yen)

As ofNovember 30, 2018

As of
May 31, 2018

AssetsCurrent Assets:
Cash and cash equivalents (Notes 3 and 4)

23,310,566

32,070,912

201,341

180,947–

16,268Consumption taxes receivable314,285–

Prepaid expenses

336,925

338,534

Other current assets

40,28736,818

Total Current Assets

24,203,404

32,643,479

Land

12,302,227

12,302,227

Buildings and structures

3,275,792

3,274,666

Tools, furniture and fixtures

19,917

19,917

Construction in progress

2,997

3,687

Land in trust accounts

353,252,551

335,174,786

Buildings and structures in trust accounts

105,948,878

101,335,964

Machinery and equipment in trust accounts

859,534

765,971

Tools, furniture and fixtures in trust accounts

259,118

228,475

Construction in progress in trust accounts

422,488821,311(25,163,878)(23,429,603)

2,398,276

2,398,276

306,884

306,884

453,884,784

433,202,561

325

379

Lease and guarantee deposits in trust accounts

113,685

113,685

Long-term prepaid expenses

884,453

903,807

Deferred tax assets (Note 13)

26,08840,494

Derivative assets (Note 4)

51,62983,269Deferred investment corporation bond issuance costs

14,697

17,651Others33,504

34,699

1,124,381

1,193,984

479,212,569

467,040,024

Tenant receivables
Income taxes refundable

Investment Properties, at cost (Notes 5 and 6):

Less: accumulated depreciation
Leasehold rights
Leasehold rights in trust accounts
Total Investment Properties, net
Investments and Other Assets:
TrademarkTotal Investments and Other Assets
Total Assets
The accompanying notes are an integral part of these financial statements.

22

(Thousands of yen)

As ofNovember 30, 2018

As of
May 31, 2018

Liabilities
Current Liabilities:
Accounts payable
Investment corporation bonds due within one year
(Notes 4 and 9)
Long-term debt due within one year (Notes 4 and 9)

1,255,722

872,092

3,000,000–

18,000,000

15,500,000

583,519534,702

990

655

Accrued consumption taxes

122,293296,361

Rent received in advance

2,177,690

2,073,800

Other current liabilities

656,351524,628

Total Current Liabilities

25,796,565

19,802,238

2,100,000

5,100,000

Long-term debt (Notes 4 and 9)

175,850,000

168,350,000

Tenant security deposits including trust accounts (Note 4)

20,792,631

19,502,509

Derivative liabilities (Note 4)

349,866

434,527

Other long-term liabilities

199,228

174,578

Total Long-Term Liabilities

199,291,725

193,561,614

225,088,290

213,363,852

251,551,759

251,551,759(3,675,523)(3,675,523)

247,876,236

247,876,236

567,422

164,1635,901,266

5,887,688

254,344,924

253,928,087

Deferred gains or losses on hedges(220,645)(251,915)

Total valuation and translation adjustments(220,645)(251,915)

Total Net Assets

254,124,279

253,676,172

Total Liabilities and Net Assets

479,212,569

467,040,024

Accounts payable – other
Income taxes payable

Long-Term Liabilities:
Investment corporation bonds (Notes 4 and 9)

Total Liabilities

Net Assets (Notes 8 and 14)
Unitholders’ Equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 491,877 units as ofNovember 30, 2018 and May 31, 2018
Deduction from unitholders’ capital
Unitholders’ capital, net
Reserve for reduction entry
Retained earnings
Total Unitholders’ Equity
Valuation and translation adjustments

The accompanying notes are an integral part of these financial statements.
III. Balance Sheets

23

IV. Statements of Income and Retained Earnings
For the fiscal periods ended November 30, 2018 and May 31, 2018

(Thousands of yen)

For the fiscal periods
ended November 30, 2018
Operating Revenues:
Rental revenues (Note 7)
Other revenues related to property leasing (Note 7)

For the fiscal periods
ended May 31, 201813,164,115
29,733

12,868,665
41,409Gain on sale of investment properties (Note 11)
Dividend income
Total Operating Revenues––

481,734
48,821

13,193,848

13,440,629

Operating Expenses:
Property-related expenses (Note 7)
Asset management fees
Asset custody fees

5,344,992
1,068,779
23,4255,410,175
1,064,808
24,796

79,32818,30876,501
19,7387,200
116,304

7,200
158,669

6,658,336
6,535,512

6,761,887
6,678,742

29
721
2,323
87

9
698
137,419898

3,160

139,024

482,148
16,708133,109–
4,458

542,083
16,892
144,081
125,589
100,880

636,423
5,902,249
5,902,249

929,525
5,888,241
5,888,241

994
(11)

775
5

983

780

5,901,266–
5,901,266

5,887,461
227
5,887,688

Administrative service fees
Trust fees
Directors’ compensation
Other operating expenses
Total Operating Expenses
Operating Income
Non-Operating Revenues:
Interest income
Reversal of distribution payable
Insurance income
Other non-operating revenues
Total Non-Operating Revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Borrowing expenses
Loss on fire
Other non-operating expenses
Total Non-Operating Expenses
Ordinary Income
Income Before Income Taxes
Income taxes – current
Income taxes – deferred
Total Income Taxes (Note 13)
Net Income
Retained Earnings Brought Forward
Retained Earnings at End of Period

The accompanying notes are an integral part of these financial statements.

24

IV. Statements of Income and Retained Earnings

V. Statements of Changes in Net Assets
For the fiscal periods ended November 30, 2018 and May 31, 2018
Number of
Units
Unitholders’(Units)CapitalBalance as ofNovember30, 2017
Cashdistributions
declared
Net income
Acquisition oftreasury
investment
units
Retirement oftreasury
investment
units (Note 8)
Net changesof items otherthanunitholders’equityBalance as of
May 31, 2018
Cashdistributions
declared
Net income

497,869 251,551,759

Deduction
fromUnitholders'Capital(Thousands of yen)

Unitholders’ Equity

Deferred
Gains orReserve for Retained Treasury
Unitholders’ Reduction
Investment Losses on
Earnings
capital, net
Hedges
Entry
Units－ 251,551,759

164,1635,455,378－

Total Net
Assets(375,212) 256,796,088

–

－

－

－

－

(5,455,151)－－(5,455,151)

–

－

－

－

－

5,887,461－－

5,887,461(5,992)

－

－

－

－

－

(3,675,523)－(3,675,523)–－(3,675,523)(3,675,523)－－

3,675,523

－

－

–

－

－

－

－

－

－

123,297

123,297(3,675,523) 247,876,236

164,1635,887,688－(251,915) 253,676,172

491,877 251,551,759
–

－

－

－

－

(5,484,429)－－(5,484,429)

–

－

－

－

－

5,901,266－－

5,901,266

－

－

－

－

31,27031,270－(220,645) 254,124,279

Provision ofreserve for403,259(403,259)–－－－
reduction
entry
Net changesof items other
–
－
－
－
－
－
than
unitholders’equityBalance as491,877 251,551,759(3,675,523) 247,876,236
567,422
5,901,266
of November
30, 2018
The accompanying notes are an integral part of these financial statements.

V. Statements of Changes in Net Assets

25VI. Statements of Cash Flows
For the fiscal periods ended November 30, 2018 and May 31, 2018

(Thousands of yen)

For the fiscal periods
ended
November 30, 2018

For the fiscal periods
ended
May 31, 2018

Income before income taxes

5,902,249

5,888,241

Depreciation and amortization

1,738,044

1,775,614

2,954

2,938

Interest expense

498,856

558,975(Increase) decrease in tenant receivables(20,393)

41,314

Increase (decrease) in accounts payable

172,710(19,484)

Increase in rent received in advance

103,890

27,552

Interest payments(498,948)(558,883)(Decrease) increase in accrued consumption taxes(174,069)

39,404

Increase in consumption taxes receivable
Decrease due to sale of investment properties in trust
accounts
Other, net(314,285)––

69,827,449

201,602378,798

7,612,610

77,961,918(22,176,185)(43,364,997)(2,500)––3,951,142

Proceeds from tenant security deposits including trust
accounts

1,938,002

4,398,247

Refunds of tenant security deposits including trust
accounts(647,880)(2,353,203)(20,888,563)(37,368,811)

Proceeds from short-term debt–

39,000,000

Repayments of short-term debt–

(41,000,000)

Proceeds from long-term debt

15,500,000

6,000,000

Repayments of long-term debt

(5,500,000)(19,350,000)–(3,675,523)(5,484,393)(5,455,152)

Net Cash Provided by (Used in) Financing Activities

4,515,607(24,480,675)

Net Change in Cash and Cash Equivalents(8,760,346)

16,112,432

Cash and Cash Equivalents at Beginning of Period

32,070,912

15,958,480

Cash and Cash Equivalents at End of Period (Note 3)

23,310,566

32,070,912

Cash Flows from Operating Activities:

Amortization of bond issuance costs

Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
including trust accounts
Payments for purchases of intangible assets
Proceeds from redemption of investment securities

Net Cash Used in Investing Activities
Cash Flows from Financing Activities:

Payment for acquisition of treasury investment units
Distributions paid

The accompanying notes are an integral part of these financial statements.

26

VI. Statements of Cash Flows

VII. Notes to Financial Statements
For the fiscal periods ended November 30, 2018 and May 31, 2018

Note 1 – Organization and Basis of Presentation
Organization
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred to as“DOI”) was established on July 11, 2005 as an investment corporation under the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951, including subsequent revisions, hereinafter referred to as the“Investment Trust Act”) by the founder (the former daVinci Select; now, Daiwa Real Estate Asset Management(hereinafter referred to as the “Asset Manager”)).
DOI is an externally managed real estate fund, established as an investment corporation. The Asset Manager,
as DOI’s asset management company, is engaged in acquiring, managing, leasing, and renovating officeproperties. Daiwa Securities Group Inc. currently owns 100% of the shares of the Asset Manager.
On October 18, 2005, DOI had raised approximately 49,498,710 thousand yen through an initial public offeringof units. Those units were listed on the J-REIT section of the Tokyo Stock Exchange.
As of November 30, 2018, DOI had ownership or trust beneficiary interests in 58 office properties withapproximately 360,959m2 of rentable office space and had leased office space to 624 tenants engaged in avariety of businesses. The occupancy rate for the office properties was approximately 98.9 %.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment Trust Act, the Financial Instruments and Exchange Act and their related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements of International Financial Reporting Standards or
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been reformatted and translated into English from the financial
statements of DOI prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. In preparing theaccompanying financial statements, relevant notes have been expanded and certain reclassifications have been
made from the Japanese GAAP financial statements. Certain supplementary information included in the statutory
Japanese GAAP financial statements, but not required for fair presentation, is not presented in theaccompanying financial statements. Certain reclassifications have been made to the prior period’s financial
statements to conform to the presentation for the current period.
DOI maintains its accounting records in Japanese yen.
DOI’s fiscal period is a six-month period ending at the end of May and November of each year.

Note 2 – Summary of Significant Accounting Policies(a) Cash and Cash Equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of threemonths or less from the date of acquisition.
(b) Investment Properties
Investment properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the office properties and the trust beneficiary interests in trust. Investment property
balances are depreciated using the straight-line method over the estimated useful lives as follows:
As of November 30, 2018
As of May 31, 2018
Buildings and structures
2-64 years
2-64 years
Machinery and equipment
7-23 years
7-23 years
Tools, furniture and fixtures
5-15 years
5-15 years
Cost related to the renovation, construction improvement of properties is capitalized. Expenditures for repairs andmaintenance which do not add to the value or prolong the useful life of property, are expensed as incurred.

VII. Notes to Financial Statements

27

(c) Deferred Investment Corporation Bond Issuance Costs
Deferred investment corporation bond issuance costs are amortized on a straight-line basis over the respective
terms of the bonds.
(d) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements andincome tax bases of assets and liabilities using the statutory rate.
(e) Real Estate Taxes
Investment properties are subject to various taxes, such as property taxes and city planning taxes. Owners of theproperties are registered by records maintained in each jurisdiction by the local government. The taxes are imposedon the registered record owner as of January 1 of each year, based on an assessment made by the local government.
When a property is purchased within the calendar year, the taxes for the corresponding calendar year are imposedon the seller. DOI pays the seller the corresponding amount of the taxes for the period from property acquisition dateto December 31 of the calendar year and capitalizes these amounts as acquisition costs of the property, rather than
expensing them. In subsequent calendar years, such taxes on investment properties are charged as operating
expenses in each fiscal period.
The following is a summary of capitalized real estate taxes.

(Thousands of yen)

Capitalized real estate taxes

For the fiscal periods ended
November 30, 201827,275For the fiscal periods ended
May 31, 2018
126,301(f) Consumption Taxes
Consumption taxes are excluded from transaction amounts. Generally, consumption taxes paid are offset against thebalance of consumption taxes withheld. As such, the excess of payments over amounts withheld is included in thecurrent assets while the excess of amounts withheld over payments is included in the current liabilities. Non-deductible
consumption taxes relating to investment properties are amortized equally over five years.
(g) Hedge Accounting
DOI enters into derivative transactions for the purpose of hedging risks in the Articles of Incorporation of DOI in
accordance with its general risk management policy. DOI uses interest-rate swaps as hedging instruments in order tohedge the risk of interest rate fluctuations related to borrowings. Pursuant to Japanese GAAP, DOI applies the special
accounting treatment to interest-rate swaps which qualify for hedge accounting and meet specific criteria. Under the
special accounting treatment, the related differentials paid or received under such swap contracts can be recognized
and included in interest expense or income of the hedged assets or liabilities, and the interest-rate swaps are notrequired to be measured at fair value separately. The assessment of hedge effectiveness has been made each fiscal
period except for interest-rate swaps which meet the special criteria.
(h) Revenue Recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating
revenues such as utility charge reimbursements, parking space rental revenues and other income. Rental revenues
are generally recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognizedwhen earned and their amounts can be reasonably estimated.
(j) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, all assets and liabilities with respect to assets in trust, as well as all
income generated and expenses incurred with respect to assets in trust, are recorded in the relevant balance sheet
and income statement accounts of the accompanying financial statements.
(j) Changes in Presentation“Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16,2018) has been applied from the beginning of the 26th Fiscal Period.
Deferred tax assets are stated in the category of Investments and Other Assets, deferred tax liabilities are stated in
the category of Long-Term Liabilities.

28

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as ofNovember 30, 2018 and May 31, 2018 consisted of the following:(Thousands of yen)

Cash and deposits
Cash and deposits in trust accounts
Cash and cash equivalents

As of November 30, 2018
19,008,712
4,301,854
23,310,566

As of May 31, 2018
28,687,859
3,383,053
32,070,912

Note 4 – Financial Instruments(a) Qualitative Information for Financial Instruments
Policy for Financial Instrument Transactions
DOI raises funds through borrowings, issuance of investment corporation bonds and issuance of investment units
for acquisition and renovation of investment properties, cash distributions of dividends and repayment of bankborrowings. In financing through interest-bearing debt, DOI raises funds with longer term, fixed-rate and welldiversified maturities to secure stable financing capacity and avoid potential risk of rising interest rates.
Surplus funds are managed considering risk and liquidity, by investing in highly liquid monetary assets and securities(in principle, deposits).
DOI enters into derivative transactions only for the purpose of hedging interest rate risks arising from liabilities.
Nature and Extent of Risks arising from Financial Instruments and Risk Management
Proceeds from borrowings and investment corporation bonds are used mainly to acquire investment properties andrepay or redeem outstanding borrowings and bonds. These borrowings and bonds are exposed to liquidity risk. Suchrisk is managed in ways such as maintaining the LTV ratio at low levels, diversifying maturities, keeping the ratio of
long-term debt to total debt at high levels, and diversifying lenders. For the floating-rate borrowings exposed to therisk of future interest rate fluctuations, DOI uses derivative transactions (interest-rate swap) as hedging instruments, inorder to avoid interest rate fluctuations and to fix the amount of interest payments for floating-rate borrowings.
DOI evaluates the effectiveness of hedges by the correlation between the change in aggregated amount of cash
flow of the hedging instruments and the change in aggregated amount of cash flow of the hedged items. The
assessment of hedge effectiveness is omitted for the interest-rate swaps which meet the specific criteria under the
special accounting treatment.
Derivative transactions are executed and monitored in compliance with the rules and procedures set forth in the risk
management policy of DOI.
Tenant security deposits including trust accounts are exposed to liquidity risk arising from refunding deposits in theevent of vacating of properties by tenants. Such risk is managed by reserving some parts of the funds.
Bank deposits are used for investing DOI’s surplus funds. These bank deposits are exposed to credit risks such as
bankruptcy of the depository financial institutions. DOI manages credit risk by investing only in short-term deposit andsetting a minimum credit rating requirement for the depository financial institutions (excluding deposits for settlement
purposes).
Supplemental Explanation regarding Fair Value of Financial Instruments
The fair value of financial instruments is based on their quoted market price. When there is no quoted market priceavailable, fair value is reasonably estimated. Since certain assumptions and factors are reflected in estimating the fairvalue, different assumptions and factors could result in a different value. Also, the contractual amounts of derivativetransactions do not represent the market risk involved in these derivative transactions.

VII. Notes to Financial Statements

29

(b) Estimated Fair Value of Financial Instruments
Book value, fair value and difference between the two as of November 30, 2018 and May 31, 2018 were as follows:(Thousands of yen)

As of November 30, 2018

As of May 31, 2018

AssetsBook value

Fair value

DifferenceBook value

Fair value

Difference

Cash and cash
equivalents
Total

23,310,566

23,310,566–

32,070,912

32,070,912–

23,310,566

23,310,566–

32,070,912

32,070,912–

3,000,000

3,004,200

4,200

–

–

–

18,000,000

18,008,126

8,126

15,500,000

15,510,392

10,3922,100,000

2,158,380

58,3805,100,000

5,168,640

68,640Long-term debt

175,850,000

175,820,892(29,108)

168,350,000

168,312,077(37,923)

Total

198,950,000

198,991,598

41,598

188,950,000

188,991,109

41,109(322,521)(322,521)–(368,208)(368,208)–

Liabilities
Investment
corporation bonds
due within one
year
Long-term debt
due within one
year
Investment
corporation bonds

Derivativetransactions (*)(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parenthesis indicating the net liability
position.

The financial instruments whose fair value is deemed extremely difficult to determine are excluded from theabove table (See Note 2 below).
Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Assets:(1) Cash and cash equivalents
Due to the short maturities, the book value of these assets is deemed a reasonable approximation of the fairvalue.
Liabilities:(1) Investment corporation bonds due within one year and investment corporation bonds
The fair value of investment corporation bonds is based on their quoted market price.
(2) Long-term debt due within one year and long-term debt
For long-term debt with floating interest rates, their fair value and book value are nearly identical and there areno significant changes in DOI’s credit risk after borrowing. Therefore, for these items, their book value isassumed as their fair value. For long-term debt with fixed interest rates, their fair value is calculated based on
the present value of principle and interest cash flows discounted at the current interest rate which is estimated tobe applied if similar new debt is entered into. However, the fair value of certain floating-rate long-term debt that
qualifies for the special treatment of interest-rate swaps is calculated based on the present value of principle andinterest cash flows which are processed as a single unit with the interest-rate swap.

30

Derivative Transactions:
The Company applies the hedge accounting for all derivative transactions. Contractual amount and fair value
were as follows:(Thousands of yen)Hedge
accounting
methodType ofderivativetransaction

Hedged item

As of November 30, 2018
Contracted amount
Fair value (*1)
Due after one year
Total

Deferral hedge
accounting
methodInterest-rate swap
Receive floating/
Pay fixed

Long-term debt

102,100,000

90,100,000(322,521)

Special treatment
for interest-rate
swapsInterest-rate swap
Receive floating/
Pay fixed

Long-term debt

4,500,000

2,000,000– (*2)

106,600,000

92,100,000(322,521)(Thousands of yen)Hedge
accounting
methodType ofderivativetransaction

Hedged item

As of May 31, 2018
Contracted amount
Fair value (*1)
Due after one year
Total

Deferral hedge
accounting
methodInterest-rate swap
Receive floating/
Pay fixed

Long-term debt

105,100,000

96,100,000(368,208)

Special treatment
for interest-rate
swapsInterest-rate swap
Receive floating/
Pay fixed

Long-term debt

4,500,000

2,000,000– (*2)

109,600,000

98,100,000(368,208)(*1) The fair value is provided by financial institutions.
(*2) Fair values of interest-rate swaps with the special treatment are included in fair values of related long-term debt as the interest-rate swaps areprocessed as a single unit with the hedged long-term debt.

2. Financial instruments whose fair value is deemed extremely difficult to determine
Tenant security deposits including trust accounts (with a book value of 20,792,631 thousand yen as ofNovember 30, 2018 and 19,502,509 thousand yen as of May 31, 2018) that have been deposited by tenants
were excluded from the scope of fair value disclosure because they are not marketable, and the actual deposit
period is not estimable, which in turn makes it difficult to reasonably estimate the future cash flows.
3. Redemption schedule for monetary claims(Thousands of yen)

As of November 30, 2018

Cash and cash equivalents
Total

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years
23,310,566––––
23,310,566––––
Due within
one year

Due after
five years––(Thousands of yen)

As of May 31, 2018

Cash and cash equivalents
Total

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years
32,070,912––––
32,070,912––––
Due within
one year

Due after
five years

VII. Notes to Financial Statements

–
–

31

4. Redemption schedule for investment corporation bonds and long-term debt
(Thousands of yen)

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due within
one year

As of November 30, 2018

Investment corporation bonds
Long-term debt
Total

Due after
five years

3,000,000–––– 2,100,000
18,000,000 28,100,000 24,200,000 31,600,000 26,200,000 65,750,000
21,000,000 28,100,000 24,200,000 31,600,000 26,200,000 67,850,000(Thousands of yen)

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due within
one year

As of May 31, 2018

Investment corporation bonds
Long-term debt
Total

Due after
five years– 3,000,000––– 2,100,000
15,500,000 19,500,000 33,300,000 21,500,000 30,600,000 63,450,000
15,500,000 22,500,000 33,300,000 21,500,000 30,600,000 65,550,000

Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of November 30, 2018 and May 31, 2018 consisted of the following:
As of November 30, 2018
Acquisition
cost

Accumulated
depreciation

Book value

Acquisition
cost

Accumulated
depreciation

Book valueLand

12,302,227–

12,302,227

12,302,227–

12,302,227

Buildings andstructures

3,275,792(2,237,768)

1,038,024

3,274,666(2,153,748)

1,120,918

Tools, furnitureand fixtures

19,917(9,943)

9,974

19,917(8,805)

11,112

Construction inprogress

2,997

–

2,997

3,687

–

3,687

Land in trust
accounts

353,252,551–

353,252,551

335,174,786–

335,174,786

Buildings andstructuresin trust accounts

105,948,878(22,376,590)

83,572,288

101,335,964(20,770,634)

80,565,330

Machinery andequipmentin trust accounts

859,534(408,262)

451,272

765,971(378,846)

387,125

Tools, furnitureand fixturesin trust accounts

259,118(131,315)

127,803

228,475(117,570)

110,905

Construction inprogressin trust accounts

422,488–422,488821,311–

821,311476,343,502(25,163,878)

451,179,624

453,927,004(23,429,603)

430,497,401

Total

32

(Thousands of yen)

As of May 31, 2018

Note 6 – Fair Value of Investment and Rental Properties
The book value, net changes in the book value and the fair value of the investment and rental properties wereas follows:(Thousands of yen)

For the fiscal periods ended
November 30, 2018

For the fiscal periods ended
May 31, 2018

Balance at beginning of period

432,377,563

459,753,017

Change during the period (Note 2)

21,081,736(27,375,454)

Balance at end of period

453,459,299

432,377,563

Fair value (Note 3)

537,030,000

506,040,000

Book value: (Note 1)(Notes)1. The book value represents the acquisition cost less accumulated depreciation.
2. Significant changes
For the fiscal period ended November 30, 2018, the major reason for the increase is acquisition of “Prime Kanda Building,” “Kita-Shinagawa
Gotenyama Building” and “Sasazuka NA Building” (20,295,000 thousand yen). The major reason for the decrease is depreciation (1,734,275
thousand yen).
For the fiscal period ended May 31, 2018, the major reason for the increase is acquisition of “CONCURRED Yokohama” and “Daiwa Kanda East”(42,300,000 thousand yen). The major reason for the decrease is sale of “Daiwa Meieki Building” and “Shinjuku Maynds Tower (3/7 out of 6/7 ofco-ownership interest)” (69,827,449 thousand yen) and depreciation (1,772,039 thousand yen).
3. The fair values as of November 30, 2018 and May 31, 2018 were determined by the sum of appraisal values provided by external real estateappraisers.

VII. Notes to Financial Statements

33

Note 7 – Rental Revenues and Expenses
Rental revenues and expenses for the fiscal periods ended November 30, 2018 and May 31, 2018 were as
follows:(Thousands of yen)

For the fiscal periods ended
November 30, 2018

For the fiscal periods ended
May 31, 201813,164,115

12,868,665

29,733

41,40913,193,848

12,910,074

928,207962,222

Utilities expenses

1,093,880

998,452

Taxes and dues

1,041,949

1,108,573

Insurance expenses

14,086

14,249Repair expenses

472,933

505,705

1,734,275

1,772,039

59,662

48,935

Total rental expenses

5,344,992

5,410,175

Income from property leasing

7,848,856

7,499,899

Revenues from property leasing:
Rental revenues
Other revenues related to property leasing
Total revenues from property leasing
Rental expenses:
Consignment expenses

Depreciation
Other

Note 8 – Net Assets
DOI issues non-par value units in accordance with the Investment Trust Act and all of the amounts issued aredesignated as stated capital. DOI maintains a minimum of 50 million yen of net assets as required by theInvestment Trust Act.
Treasury investment units retired as of November 30, 2018 and May 31, 2018 were as follows.
As of November 30, 201834

(Thousands of yen)

As of May 31, 2018

Total number of units retired (units)

–

5,992

Total amount of retired units–

3,675,523

Note 9 – Long-Term Debt Due Within One Year, Investment Corporation Bonds Due Within
One Year, Long-Term Debt and Investment Corporation Bonds
Long-term debt due within one year, investment corporation bonds due within one year, long-term debt andinvestment corporation bonds as of November 30, 2018 and May 31, 2018 consisted of the following:(Thousands of yen)

As of November 30, 2018
Unsecured loans due 2019 to 2027, principallyfrom banks and insurance companies with interest
rates mainly ranging from 0.2% to 1.0%

As of May 31, 2018

193,850,000

183,850,000

0.4% unsecured bond due 2019

3,000,000

3,000,000

1.0% unsecured bond due 2024

2,100,000

2,100,000

198,950,000

188,950,000

Total(Note) The interest rates presented are daily weighted average interest rates. As for long-term debts which were hedged by interest-rate swaps for the
purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate daily weighted average interest rates.

The annual maturities of long-term debt and investment corporation bonds as of November 30, 2018 were as
follows:(Thousands of yen)

Due within
one yearLong-term debt and investment
corporation bonds

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due after
five years

21,000,000 28,100,000 24,200,000 31,600,000 26,200,000 67,850,000

Note 10 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of November 30, 2018
and May 31, 2018 were as follows:(Thousands of yen)

As of November 30, 2018

As of May 31, 2018

Due within one year

11,138,859

10,074,022

Due after one year

20,667,137

17,842,811

Total

31,805,996

27,916,833

VII. Notes to Financial Statements

35

Note 11 – Gain and Loss on Sale of Investment Properties
No investment properties were sold during the fiscal period ended November 30, 2018.
Gain and loss on sale of investment properties for the fiscal period ended May 31, 2018 was as follows:(Thousands of yen)

For the fiscal period
ended May 31, 2018
Daiwa Meieki Building:
Proceeds from sale of investment property

8,301,326

Cost of selling investment property(5,217,314)

Other expenses related to sale(124,549)

Gain on sale of investment property

2,959,463

Shinjuku Maynds Tower (3/7 out of 6/7 of co-ownership interests):
Proceeds from sale of investment property

62,500,000

Cost of selling investment property(64,610,135)

Other expenses related to sale

(367,594)

Loss on sale of investment property(2,477,729)

Net gain on sale of investment properties

481,734

Note 12 – Reduction of Investment Properties Purchased with Government Subsidies
Government subsidies of 32,898 thousand yen were deducted from the acquisition cost of the buildings intrust as of November 30, 2018 and May 31, 2018.

Note 13 – Income Taxes
DOI is subject to Japanese corporate income taxes on all of its taxable income. However, DOI may deduct theamount distributed to its unitholders from its taxable income when certain requirements, including a requirement
to distribute in excess of 90% of distributable profit for the fiscal period, are met under the Special Taxation
Measure Act of Japan. If DOI does not satisfy all of the requirements as specified in the Act, the entire taxable
income of DOI will be subject to regular corporate income taxes in Japan.
DOI has made distribution in excess of 90% of its distributable profit for each fiscal period in order to be able
to deduct such amount from taxable income.
The following table summarizes the significant difference between the statutory tax rate and DOI’s effective tax
rate for financial statement purposes.

(%)

For the fiscal periods ended
November 30, 2018

For the fiscal periods ended
May 31, 2018

Statutory tax rate

31.51

31.74

Deductible cash distributions(31.50)(29.56)–(2.17)

Others0.01

0.00

Effective tax rate

0.02

0.01

Provision of reserve for reduction entry

36

The significant components of deferred tax assets and liabilities as of November 30, 2018 and May 31, 2018
and were as follows:(Thousands of yen)

As of November 30, 2018

As of May 31, 2018

Deferred tax assets:
Accrued enterprise tax

198

118,187

142,600

118,206

142,608

Reserve for reduction entry

75,80675,806

Deferred gains on hedges

16,312

26,308

Total deferred tax liabilities

92,118102,114

Net deferred tax assets

26,08840,494

Deferred losses on hedges
Total deferred tax assets
Deferred tax liabilities:

Note 14 – Per Unit Information
Information about earnings per unit for the fiscal periods ended November 30, 2018 and May 31, 2018, net
assets per unit as of November 30, 2018 and May 31, 2018 were as follows:(Yen)

For the fiscal periods ended
November 30, 2018

For the fiscal periods ended
May 31, 2018

Net income per unit

11,997

11,882

Weighted average number of units outstanding (units)491,877495,505

Earnings per Unit:(Yen)

As of November 30, 2018
Net Assets per Unit

516,641

As of May 31, 2018515,731

The computation of earnings per unit is based on the weighted average number of units outstanding during theperiod. The computation of net assets per unit is based on the number of units outstanding at each period end
as stated on the balance sheets.
The diluted net income per unit is not stated as there are no diluted investment units.
There is no amount that is not available to ordinary unitholders.

VII. Notes to Financial Statements

37

Note 15 – Distribution Information
DOI’s Articles of Incorporation stipulate that DOI is required to make cash distribution in excess of 90% of
distributable profit as defined in the Special Taxation Measure Act of Japan for each fiscal period. Therefore, thetotal amount of dividends that DOI has determined to pay out is 5,901,048,369 yen for the fiscal period ended
November 30, 2018 and 5,484,428,550 yen for the fiscal period ended May 31, 2018 that are the largest integral
multiple of 491,877, the number of units outstanding as of November 30, 2018 and May 31, 2018, after
deducting provision of reserve for reduction entry as stipulated in Article 66-2 of the Special Taxation Measure
Act of Japan. Furthermore, DOI does not pay out dividends that exceed accounting profits as outlined in Article
32-2 of DOI’s Articles of Incorporation.
(Yen)

For the fiscal periods ended
November 30, 2018

For the fiscal periods ended
May 31, 2018

I Unappropriated retained earnings

5,901,266,172

5,887,688,126

II Cash distributions declared

5,901,048,369

5,484,428,550–

403,259,576

217,803–

III Voluntary reserves Provision of reserve for
reduction entry
IV Retained earnings brought forward

Cash distributions are declared by the board of directors after the end of each period. Such distributions arepayable to unitholders of record at the end of each period. Information of cash distributions per unit and theboard of directors meeting dates when the distributions were proposed and approved were as follows:(Yen)

Cash distributions per unit
Board of directors meeting dates

38

For the fiscal periods ended
November 30, 2018

For the fiscal periods ended
May 31, 2018

11,997

11,150January 21, 2019

July 18, 2018

Note 16 – Related-Party Transactions
Related-party transactions for the fiscal periods ended November 30, 2018 and May 31, 2018 were as follows:
For the fiscal period ended November 30, 2018
No related-party transaction was entered into for the fiscal period ended November 30, 2018.
For the fiscal period ended May 31, 2018
Classification
Name
Location
Capital stock (Thousands of yen)
Principal business
Ratio of voting rights
Relation to the related party
Nature of transaction
Amount of transaction (Thousands of yen)Account
Balance at the end of period(Thousands of yen)

Subsidiary of other related party
Godo Kaisha Yokohama Office Management
Chuo-ku, Tokyo
400
Real estate management–
Acquisition of trust beneficial interest in real estate
Acquisition of trust beneficial interest in real estate (Notes 1, 2 and 3)
38,100,000––

The above amount of transaction doesn’t include consumption tax, etc.
(Notes)
1. Terms of transactions were determined based on market price.
2. Terms of transactions with interested parties were determined based on the Assets Manager’s internal regulation which was established to prevent
conflict of interest.
3. DOI holds real estate in trust associated with trust beneficial interest that is equivalent to 75% of quasi co-ownership interest in the entire
CONCURRED Yokohama.

Note 17 – Segment Information
For the fiscal periods ended November 30, 2018 and May 31, 2018
Segment Information
Segment information has been omitted as DOI has only one segment, which is property leasing business.
Related Information
Information about Products and Services
Disclosure of this information has been omitted as operating revenues to external customers for a single
product/service category account for more than 90% of the operating revenues on the statements of income
and retained earnings.
Information about Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as domestic operating revenues account for more than 90% of
total operating revenues.
(2) Investment properties
Disclosure of this information has been omitted as domestic investment properties account for more than 90%of the book value of the total investment properties.
Information about Major Tenants
Disclosure of this information has been omitted as there is no tenant that accounts for 10% or more of theoperating revenues recorded in the statements of income and retained earnings.

VII. Notes to Financial Statements

39

Note 18 – Significant Subsequent Events(a) Acquisition of Asset
DOI acquired the trust beneficial interest in real estate on December 27, 2018 as described below.
Overview of the asset
Asset type
Property nameLocation
Acquisition priceAgreement date
Acquisition dateSellerTrust beneficial interest in domestic real estate (Note 1)
Sasazuka South Building
1-64-8 Sasazuka, Shibuya-ku, Tokyo
3,000,000 thousand yen (excluding acquisition costs, consumption tax, etc.)
December 19, 2018
December 27, 2018
Non-disclosed (Note 2)(Note 1) The asset is a trust beneficial interest with two compartmentalized ownerships of the floors 1 to 7 and the 8th floor.
(Note 2) The sellers are domestic special purpose companies. Their information is not disclosed since consent for disclosure has not been obtained
from them.

(b) Borrowing of Funds
DOI borrowed funds on December 27, 2018 as described below. The funds were allocated for acquisition of theproperty described in “(a) Acquisition of Asset” and its related costs.
Details of the borrowing
LenderBalance (Thousands of yen)Interest rate
Borrowing date
Repayment method
Note
Maturity

Sumitomo Mitsui Banking Corporation
3,000,000
1 month Japanese yen TIBOR +0.25% (Note)
December 27, 2018
Bullet payment
Unsecured
December 27, 2019

(Note) Interest payments shall be paid at the end of every month and the repayment date. (If any such date is not a business day, it will be thefollowing business day. If such date falls within the next month, the preceding business day of the month will be the payment day.) Interest rateis calculated based on the 1 month Japanese yen TIBOR which Japanese Bankers Association announces two business days prior to the firstday of the applicable period.

40

VIII. Independent Auditor’s Report

VIII. Independent Auditor’s Report41

IX. Investor Information
History of Investment Unit Price
9,000 (Units)(Yen) 900,000
Investment unit price (left axis)

Trading volume (right axis)

800,000

8,000

700,000

7,000

600,000

6,000

500,000

5,000

400,000

4,000

300,000

3,000

200,000

2,000

100,000

1,000

0

0

2016 2017
Dec. Jan.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

2018
Dec. Jan.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

Overview of Investment Units and Unitholders (As of November 30, 2018)■ No. of Investment Units by Investor Type
26th
Fiscal Period

Individuals/others
15,507 units (3.2%)

Financial institutions
170,277 units (34.6%)■ No. of Unitholders
by Investor Type
Foreigners 109,735 units (22.3%)

Total: 491,877 units
Other domestic corporations 191,021 units (38.8%)

25th
Fiscal Period

Individuals/others
17,144 units (3.5%)

Financial institutions
171,532 units (34.9%)

Securities firms 5,337 units (1.1%)

Foreigners 106,453 units (21.6%)

Total: 491,877 units
Other domestic corporations 190,961 units (38.8%)

Number ofPercentage
Units Owned
Share(Units)

128,905

26.21

2. The Master Trust Bank of Japan, Ltd. (Trust Account)

65,79013.38

3. Daiwa Securities Group Inc.

59,321

12.06

4. Japan Trustee Services Bank, Ltd. (Trust Account)

40,651

8.26

Trust & Custody Services Bank, Ltd.
5.
(Securities Investment Trust Account)

20,941

4.26

13,4442.73

7. BNYM AS AGT/CLTS 10 PERCENT

9,017

1.83

8. SSBTC CLIENT OMNIBUS ACCOUNT

6,061

1.23

9. STATE STREET BANK AND TRUST COMPANY 505012

5,413

1.10

10. STATE STREET BANK WEST CLIENT - TREATY 505234

4,353

0.88

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)92(1.3%)

Other domestic
corporations

121(1.7%)

Foreigners

248(3.6%)

Securities firms

16(0.2%)

Total

6,936

January 21, 2019 : Announcement of financial results
26th Fiscal Period
February 14, 2019 : Sending of Japanese version Business
Report for 26th Fiscal Period(Statement of Financial Performance)
February 15, 2019 : Start paying distributions for
26th Fiscal PeriodNov.
End offiscal period

Aug.
July

Jan.
End offiscal period

Feb.

May

(Note) The percentage share figures are rounded to the second decimal place.

42

Financial institutions

IR Calendar

1. Daiwa Investment Management Inc.

6.

6,459
(93.1%)

Securities firms 5,787 units (1.2%)

Top Ten Unitholders (As of November 30, 2018)
Name of Investor

Individuals/others

July 2019: Announcement of financial results for27th Fiscal Period
August 2019 : Sending of Japanese version Business
Report for 27th Fiscal Period(Statement of Financial Performance)
August 2019 : Start paying distributions for27th Fiscal Period

Investor Memo
End of fiscal period

May 31 and November 30 of each year

General Meeting of Unitholders

Held at least once every two years

Date for finalizing Unitholders with voting rights
for the General Meeting of Unitholders

Date prescribed in Article 15 of the Articles of Incorporation

Reference date for finalizing payment of
distributions

May 31 and November 30 of each year
(distributions are paid within three months of this reference date)

Listed financial instruments exchangeTokyo Stock Exchange (securities code: 8976)

Newspaper in which notice is posted

Nikkei Inc.

Manager of Unitholder Registry, etc.

Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233

Office handling administrative affairs

Transfer Agency Department of Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo
100-8233 Phone 0120-782-031 (toll-free in Japan)

Service counter

Head Office and All branches of the Sumitomo Mitsui Trust Bank nationwide

Provision of Information via Website
Daiwa Office Investment Corporation conducts information distribution via its website as an important tool for IR activities. DOI also provides an
e-mail delivery service, “IR mail Delivery Service,” which informs the subscribers of updates in website content such as press releaseannouncements via e-mail free of charge. The website will be continually enhanced and enriched so that the current situation and future
strategies of DOI are clearly communicatedDaiwa Office Investment Corporation

http://www.daiwa-office.co.jp/en/

Important information is
distributed via e-mail. Please
access and follow the simple
steps if you wish to receive
our IR mail Delivery Service.

IX. Investor Information

43

The Daiwa Office Investment Corporation logo symbolizes hospitality with an open door and the desire to be a brightand open investment corporation. We will continue to aim to be a highly-transparent investment corporation that isfurther cherished and trusted by our investors and tenants.